Paulson: Gold Bull Market Just Beginning
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- John Paulson declared on CNBC's "The Exchange" Wednesday that gold is in the "beginnings or early stages" of a long-term bull market, arguing that eroding faith in paper currencies will keep demand for the metal growing.
- Gold prices have roughly quadrupled since Paulson shifted to the metal in 2009, topping $5,000 before pulling back — a trade he made on the thesis that post-financial-crisis stimulus would weaken the U.S. dollar.
- Central banks continue adding to gold reserves alongside growing private-sector demand, with Paulson calling gold "the most apt reserve currency in the world, replacing fiat currencies."
- Gold mining stocks offer better returns than bullion itself, according to Paulson, especially companies with large undeveloped reserves.
- NovaGold Resources announced it will acquire Paulson Advisers' 40% stake in Alaska's Donlin Gold project, with Paulson — co-chairman of NovaGold — framing the stock as the best way to play rising gold prices.
- NovaGold holds 40 million ounces of indicated and measured gold resources and reserves at a $4.2 billion market capitalization, which Paulson cited as leveraged exposure to the gold trade.
Why it matters: Paulson's bull case is paired with a concrete transaction: NovaGold is acquiring his firm's 40% stake in the Donlin Gold project, and he holds the co-chairman role at NovaGold. Investors weighing his $4.2 billion-cap stock recommendation should know the commentator is also a principal in the deal he's pitching.
