Billionaire John Paulson-- who made millions betting on a housing crash and a gold boom since the financial crisis-- has released his financial records, and has increased his gold and gold-related holdings by 44%.
Paulson bought 4.53 million more shares in SPDR Gold Trust (NYSEARCA:GLD) and bought more of NovaGold Resources Inc. (NYSEMKT:NG), while also cutting his positions in AngloGold Ashanti Ltd. (ANG) and Gold Fields Ltd. (NYSE:GFI).
He also sold a lot of other stocks, boosting the weighting of his gold position even further.
Why Paulson Is Betting The Farm On Gold
Paulson isn't the only billionaire making big bets on precious metals, with George Soros and Jim Rogers both making big bets on precious metals.
Is Paulson a Genius, Mediocre, Or Lucky?
Paulson is a smart man, predicted the financial crisis, and made billions that way. He's also made billions in gold over the last 5 or more years. But that doesn't necessarily mean he's always right.
A couple of years back he jumped the gun on real estate, saying everyone should go into debt to buy a house -- of course, interest rates kept falling and home prices kept falling after that, meaning people who waited made far, far more.
Right now, Paulson is basically betting on an essential collapse of the euro. From Spiegel Online:
One of these warriors is John Paulson. The hedge fund manager once made billions by betting on a collapse of the American real estate market. Not surprisingly, the financial world sat up and took notice when Paulson, who is now widely despised in America as a crisis profiteer, announced in the spring that he would bet on a collapse of the euro.
Is he right? Possibly. Paulson is a gambling investor, meaning he'll make gigantic bets on what he thinks is going to happen to markets in the relatively short-to-medium term. For those looking for long-term results, copying Paulson is a hideous idea. But for those looking for a little more confirmation for their gold trades, this is an interesting development, and Paulson is just one of quite a few famous billionaires dumping their money into gold right now.
Meanwhile, there are reports that banks are about to start dumping scores of billions more into gold, while gold is being used now more as collateral and is beginning to be seen as a riskless asset. Nothing is risk-free, but it's good to see gold starting to get the credit it deserves relative to Treasury Bills.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I own physical gold and silver and buy regularly.