Billionaire John Paulson says gold bull market still in early stages

In an interview with CNBC on Wednesday, John Paulson, founder of Paulson & Co., said he believes the precious metal is still in the early stages of a long-term bull market.

“As people lose faith in paper currencies, gold as an alternative will continue to grow,” he said.

He added that gold will continue to benefit from strong central bank demand.

“Gold is becoming the most apt reserve currency in the world, replacing fiat currencies,” he said.

Surveys published last month showed that central banks continue to rank gold among their preferred reserve assets as they diversify their portfolios in an increasingly fragmented global financial system.

While Paulson has been one of gold's most prominent advocates over the past two decades, his investment focus has shifted in recent years. In 2009, the famed investor began buying shares of the world's largest gold-backed exchange-traded fund, SPDR Gold Shares (NYSE: GLD), and by 2011 he held roughly 31.5 million shares.

He exited the physical gold space by the second quarter of 2022. However, he is now focused primarily on gold mining equities. His hedge fund's 13F filings with the U.S. Securities and Exchange Commission, released in May, show that his current $3.11 billion portfolio is built almost entirely around gold and precious-metals mining companies.

In the interview with CNBC, Paulson said investors stand to benefit more from owning gold miners than bullion itself. He added that his primary focus is on junior exploration companies.

“I think the greatest way to invest is to invest in early-stage gold stocks,” he said.

His comments on Wednesday came after NOVAGOLD announced that it had reached definitive agreements to acquire Paulson's 40% interest in the Donlin Gold project in an all-share transaction.

Under the agreement, NOVAGOLD shareholders will own about 65% of the combined company, while Paulson's hedge fund will hold an economic interest of roughly 40%. His voting power will be capped at 19.99%, and he will also serve as Co-Chair alongside NOVAGOLD Chairman Thomas Kaplan.

Donlin Gold remains one of the world's largest undeveloped gold deposits, containing approximately 40 million ounces of measured and indicated resources at an average grade of 2.22 grams per tonne—more than double the global average for comparable projects, according to the company.

“I think the best way to play gold is through stocks like NOVAGOLD, if not NOVAGOLD itself,” he said.

Greg Lang, NOVAGOLD's President and CEO, said in an interview with Kitco News that the agreement will streamline the company's operations as it focuses on updating the project's feasibility study.