Billionaire hedge fund manager John Paulson, often referred to as the "Wall Street Short King," has recently stated that gold is currently in the early stages of a long-term bull market.
Paulson indicated that as confidence in paper currencies wanes, demand for gold as an alternative asset will continue to grow. "I do believe we are at the beginning or early stages of a long-term bull market in gold," he said. He added that gold is becoming the world's most important reserve currency, gradually replacing fiat money, with demand for physical gold from both global central banks and the private sector continuing to expand.
Paulson famously profited by shorting the U.S. subprime mortgage market in 2008, a trade considered one of the most lucrative in Wall Street history, earning him his moniker. In 2009, he shifted his focus to gold, believing the unprecedented fiscal and monetary stimulus following the financial crisis would ultimately weaken the U.S. dollar. Since then, the price of gold has approximately quadrupled, once breaching the $5,000 per ounce mark before experiencing a subsequent pullback.
Gold has seen a sustained rally since late July, with the international spot price returning to above $4,100 per ounce. At the time of writing, spot gold was trading at $4,129.34 per ounce, having gained nearly 3% since the start of July.
Investment Approach
Regarding investment strategy, Paulson believes investors can benefit more from holding gold mining stocks than from holding physical gold itself, particularly shares of companies with large undeveloped reserves. "I think the best way to invest is in early-stage gold stocks," he emphasized.
Paulson made these remarks as NovaGold Resources, where he serves as co-chairman, announced it would acquire the 40% stake held by Paulson Advisers in the Donlin Gold project in Alaska. Paulson stated that NovaGold possesses a substantial resource base, offering investors leveraged exposure to rising gold prices.
Analysts Remain Divided on Gold's Future Path
Recent market performance shows gold futures have attracted fresh buying interest after a period of consolidation, with Middle East geopolitical tensions also influencing market sentiment. However, analysts maintain a more cautious stance on gold's near-to-medium-term outlook.
In June, Goldman Sachs revised its year-end 2026 gold price target down to $4,900 per ounce from a previous forecast of $5,400. Bank of America also lowered its 2026 average gold price forecast by 14% to $4,360 per ounce, citing persistently high real yields as the primary reason.
Analysts at ING noted in a report that this week's rebound was "more driven by fresh buying interest after a period of consolidation rather than a substantive change in geopolitical or macroeconomic backdrop."
UBS Global Wealth Management's Chief Investment Office stated that the gold market is still digesting hawkish signals from Federal Reserve Chair Michelle Bowman and bond market expectations for higher U.S. policy rates. In this context, UBS CIO anticipates gold could potentially test $3,850 per ounce, with downside risks increasing.
The institution pointed out that what the gold market truly needs now is stronger investment demand. To accelerate this demand, the U.S. growth narrative would need to support the implementation of more accommodative monetary policy or shift towards a more challenging growth-inflation mix, such as stagflation. As consumer spending slows and real wage growth moderates, the sequential growth in AI-related investments is expected to ease next year.
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