The man who made the greatest deal of all time encourages to invest in gold
03. 09. 2021
John Paulson rose to prominence during the mortgage crisis of 2007–2008, when the economy plunged deeply for the next few years and Lehman Brothers collapsed. At the time, he predicted that housing-related financial assets would also collapse. He and his fund investors made $20 billion on his accurate prediction.
Currently, this investor recommends “hard” assets as the most appropriate investment. In an interview with Bloomberg, Paulson said he didn’t trust paper or digital investments.
“Cryptocurrencies, no matter how they are traded today, will eventually prove worthless. Once the enthusiasm wears off and liquidity dries up, they'll go to zero," he commented on the situation in the area of today's popular cryptocurrencies with Bitcoin in the lead.
According to him, a digital investment will lose its value significantly, even if it does not get completely to zero. These assets have not yet passed a sufficient historical test, and therefore it pays to move funds out of them and into more traditional investments, including precious metals.
Tradition trumps technology
Notwithstanding the fact that gold has held a protective hand above value and kept it in times of crisis, it is also popular, along with other precious metals, with technology companies that still use it to produce state-of-the-art equipment.
Although the metal faces many criticisms, according to which gold has lost the features of the store of value, despite this, central banks continue to accumulate it. And there's probably a reason for that. Moreover, compared to the world’s total stock of currencies, there is only a very limited amount of gold.
“As an investor, I was very concerned that my assets were denominated in US dollars,” says Paulson. “I was looking for another currency and gold was the best one.”
Paulson is not alone
Other global billionaires take the same view. Jeffrey Gundlach, a billionaire and successful investor, also leans towards precious metals.
“I am convinced that gold would become the number one asset for many years to come. The dollar will go down and the precious metal will rise many times higher. Right now it is hibernating, but in the future it will rise substantially,” said Gundlach, who is nicknamed the “Bond King”.
Steve Forbes, the founder of the legendary Forbes magazine, and Palantir Technologies, which recently came as a big surprise buying $50 million worth of gold bars out of nowhere, have similar views.
The fiscal and monetary situation has never been more favourable for gold. Rising government debts are pushing bankers to free up more cash and unleash inflationary hell. The geopolitical situation is also playing into the hands of gold, which is losing its stability and in which it pays to own something that can pay anywhere in the world.
It certainly pays to have some money for emergencies, but the future of dollar-backed assets is bleak. They are mainly destroyed by inflation, which in the long term reduces the value not only of individual financial investments, but especially of entire portfolios.
So the best investors advise that if you want to protect yourself from losing the value of your money, whether it’s in an account or in paper assets, it pays to reach for the hard and universal world currency that gold undoubtedly is.