Published: 2022.09.30. John Paulson: The role of gold as insurance

John Paulson: The role of gold as insurance - Preview

Billionaire investor and founder of Paulson & Co. predicted last year that stubborn inflation would drive up interest rates, forcing investors to abandon cash and bonds in favor of gold. In a recent interview, he explained that the yellow metal did indeed serve as a safe haven this year, falling less than stocks and bonds.
In addition, gold could regain its value if the US Federal Reserve's rate hike policy fails to significantly reduce inflation. According to Paulson, in such a scenario, investors will lose confidence in the Central Bank, as a result of which long-term inflation expectations will increase, which in turn will increase the demand for gold as a hedge.
As for the real estate market, the respected expert who predicted the “popping of the real estate bubble” in the mid-2000s explained that US real estate prices may collapse again, but this fall will not cause a new financial crisis: “Today we are not threatened by the collapse of the financial system, as it was before. The real estate market may be a little bloated. So real estate prices may decline or even out, but not to the extent that they used to.”