Betting on gold for 15 years, Paulson achieved great success; he didn't buy gold bars, but rather gold mines

Fifteen years after rising to fame by shorting the U.S. real estate market, hedge fund mogul and billionaire John Paulson is celebrating another significant victory thanks to his long-term bet on gold.

According to media reports, Paulson made a substantial bet when gold prices were around $900 per ounce. His gold investment strategy does not involve holding physical gold but rather maintaining some gold exposure through derivatives, primarily investing in gold mining companies.

Reports indicate that most of Paulson's bets are currently focused on emerging miners, as he holds shares in companies such as Perpetua Resources, Agnico Eagle Mines, and International Tower Hill Mines through Paulson & Co.

Marcelo Kim, a partner at Paulson's investment firm responsible for gold investments, revealed to the media that Paulson's investments in publicly traded mining companies are valued at approximately $840 million. According to data reported to U.S. regulators as of last December, all eight mining stocks held by Paulson recorded gains last year, with several rising over 30%.

Gold Mining Stocks "Quietly Making a Fortune"

Reports suggest that Paulson views gold as a reliable hedge against various shocks such as inflation, war, disaster, and currency devaluation. He believes it is the only reserve that can provide thousands of years of protection in physical form, and he even once offered investors a hedge fund strategy priced in gold.

Paulson believes that as gold prices rise, mining companies' profits will multiply, while mining costs remain relatively fixed, allowing for profit margins even if gold prices pull back:

"We have indeed shifted our focus to mine development because that's where you can get the maximum return. You don't need rising gold prices to achieve high returns."

During the 2007 U.S. subprime mortgage crisis, Paulson made $3.7 billion by shorting real estate and the stock market, rising to fame and being hailed as "the greatest trader in the world."

$800 Million Bet on Alaska's "Giant" Gold Mine

To further increase his stake, Paulson chose not to cash out but to "double down."

Reports indicate that he recently teamed up with another gold advocate, Thomas Kaplan, chairman of exploration company NovaGold Resources, to agree to acquire a 50% stake in Alaska's Donlin project from Barrick Gold for $1 billion. Paulson is contributing $800 million to acquire a 40% interest in the mine.

Paulson is attracted to the enormous potential of the Donlin mine. It is an undeveloped high-grade gold mine estimated to contain 39 million ounces of gold, equivalent to about a quarter of the Fort Knox gold reserves. Paulson has high hopes for it, calling it a "giant asset that will last for over 50 years."

However, the Donlin project faces significant challenges and a long development timeline. A 2021 technical report indicated that the project's initial capital costs are approximately $7.4 billion, with an additional $1.7 billion needed over its lifecycle Information from the Alaska Department of Natural Resources indicates that a road up to 30 miles long may need to be built to the nearest port, along with the construction of a natural gas pipeline. The mining site is located on indigenous land, with the nearest settlement being a small village named Crooked Creek.

Industry insiders analyze that even if everything goes according to plan, the mine may not start producing gold until early 2030 at the earliest.

This means that Paulson's substantial investment will require ongoing funding over the next several years or even decades, and must bear multiple risks including project development, environmental approvals, infrastructure support, and fluctuations in gold prices, in order to ultimately realize the potential value of its "behemoth" asset