John Paulson, founder and president of Paulson & Co., which has $36 billion in assets, believes every major Western currency is facing difficulty, and that Gold Investment offers a good hedge.
"[We] must look at the currencies in relative terms. The UK is committed in the same way that the United States is in terms of monetary stimulus. The Euro has its own problems. In these times of uncertainty for paper based currency, I feel more secure in holding gold," said Paulson in an interview with a French newspaper.
"Given the risks of inflation in three to five years and the volatility of the Euro, gold offers good protection against the paper currencies' devaluation and even the possibility of generating a return on fixed investment."
Paulson believes the US Federal Reserve's monetary stimulus measures – which include the current round of quantitative easing, QE2, worth $600 billion – will lead to a rise in the Gold Price.
"Over time, the price of gold will rise in proportion to the creation of paper Dollars," he said. "In an inflationary environment where the demand for protection increases, the price of gold can rise even further. Historically, gold has always been a safe haven against inflation and a safe haven in times of political instability. Today we face both risks."
In January 2009 Paulson & Co. began offering investors the opportunity to hold gold-denominated shares in a variety of funds.
Greenlight Capital, the $2 billionfund run by David Einhorn, also offers this facility.
Paulson & Co. this year became a sponsor of the annual Gold Survey, published by precious metals consultancy GFMS.
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Goldbug, 15 Apr '11
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