John Paulson was quick to mention that his firm's struggling gold fund is only a modest 2% of his eponymous hedge fund firm's total assets Wednesday, but even with the metal having an awful year the billionaire money manager still made the case to be bullish.
"The consequences of printing money over time will be inflation," he said at the CNBC/Institutional Investor Delivering Alpha conference in New York, "[it's] just difficult to predict when."
Paulson who moved into gold around the time Ben Bernanke and the Federal Reserve launched their first round of quantitative easing, says this year's slide in gold -- which plunged to the $1,200 level before a recent rebound -- represents "a pause period in the trend," but he thinks if the economy grows and indicators of inflation rise demand for the asset will increase again.
A number of high-profile investors have offered bullish views on gold in recent years as the metal streaked to record highs, including fellow hedge fund managers David Einhorn and George Soros, but none have been as closely associated with the investment as Paulson, in large part because he offered investors a share class that priced their holdings in his hedge fund in gold.
Paulson, who had a stake as large as 31.5 million shares in the SPDR Gold Trust (GLD) at one time -- a position that was at 21.8 million at the close of the first quarter -- has also poured assets into gold mining stocks that have also disappointed as the broader equity market surged to fresh highs this year. Those names have included
"If you're looking for a hedge against potential inflation in the future and have a longer-term view, gold is an important part of anyone's portfolio," Paulson said Wednesday.
The billionaire, who famously shorted subprime mortgage securities starting in 2006 as part of an investment thesis that has been dubbed the greatest trade ever, also addressed the real estate market, reiterating a previously expressed view that the single-best investment an individual investor can make is buying a home.
"There's still time to get involved," Paulson said, predicting the current housing rebound has another 4-7 years to run its course. His hedge fund, in addition to buying some 30,000 lots of entitled land in states like Arizona, California, Nevada, Colorado and Florida, also has a considerable stake in Realogy, which went public last October following a recapitalization orchestrated by Paulson and private equity firm Apollo Global Management, which just exited its remaining stake this week.
The last checkpoint on Paulson's market tour Wednesday was the telecom space, where a pair of his investments have been big winners this year. His firm got into Sprint after the company received an initial bid from SoftBank for a 70% stake, correctly figuring a rival bidder would emerge. When
He also spotted another opportunity in the space in Leap Wireless, buying a stake months ago and enjoying the pop last week when the company agreed to a takeover at the hands of