John Paulson: Gold is only at the beginning of a long-term bull cycle — what this means for the market
Legendary investor John Paulson, who gained fame for betting against the U.S. mortgage market before the 2008 crisis, is once again drawing market attention. This time, his forecast concerns precious metals — according to Paulson, gold is at the initial stage of a long-term bullish trend.
Paulson is confident that the current upward momentum is far from exhausted. The key driver is the erosion of trust in fiat currencies, which is pushing investors to seek alternative assets. Moreover, demand is being generated not only by central banks but also by private investors, who are increasingly joining the process.
Central Banks Are Increasing Reserves
Central banks continue to actively replenish their gold reserves. A recent industry survey showed that most central banks plan to further increase reserves, despite having already purchased 41 tons of the precious metal during one of the weaker months for gold this year.
At the time of analysis, the spot price of gold was fluctuating near $4,121 per ounce. This is notably higher than the June low below $4,000, but still far from the all-time record of $5,600 recorded at the end of January. Thus, the growth potential remains significant.
"When people lose trust in paper currencies, demand for gold as an alternative will continue to grow," Paulson emphasizes.
NovaGold and Paulson's Strategy
Paulson made his statements against the backdrop of news that his company, NovaGold Resources, is buying back 40% of the Donlin Gold project in Alaska from his own fund. The businessman serves as co-chairman of NovaGold.
As a result of the deal, NovaGold gains full control of the project. The company now has 100% ownership of Donlin Gold. A new U.S.-registered company will be created based on the assets, with an estimated value of around $4.2 billion. NovaGold shareholders will receive approximately 65%, with the remaining 35% going to Paulson himself.
According to the investor, he is more inclined toward the early stages of working with gold mining companies than investing in gold itself. As an argument, he cites an estimate: NovaGold has 40 million ounces of gold reserves, which, given its current market capitalization, indicates significant growth potential.
Not Everyone Shares the Optimism
However, not all banks share his confidence. JPMorgan recently lowered its fourth-quarter gold forecast after sharp fluctuations, although the bank still expects the metal's value to rise in the long term.
The NovaGold deal requires shareholder approval, court approval, and regulatory clearance — both companies expect to complete the process in the fourth quarter.
Cryptalist Analytical Commentary: Paulson's position deserves attention, especially in the context of his historical success. However, it is important to understand that his bet on gold mining companies is a riskier but potentially more profitable option than directly buying the metal. Current gold price dynamics and central bank actions indeed point to a structural shift, but short-term volatility is inevitable. Investors should consider gold as a strategic hedge rather than a tool for quick speculation.