Gold prices have failed to hold above $4,100 per ounce and are currently consolidating within a key support range. John Paulson, founder of the Paulson Institute and a renowned investor, stated that the long-term bull market for gold is only in its early stages. He believes that weakening market confidence in fiat currencies, coupled with continued gold purchases by central banks worldwide, will continue to benefit gold prices. Paulson's investment strategy has undergone a significant shift. He previously heavily invested in gold ETFs, but liquidated his physical gold positions in 2022. His current $3.11 billion portfolio is almost entirely invested in gold mining stocks, with a stronger preference for small and medium-sized gold exploration companies. With the inclusion of his Tanglin gold mine project's equity in NOVAGOLD, he believes the earnings potential of gold mining stocks far exceeds that of physical gold. The Tanglin gold mine, with its massive resources and outstanding grade, has become a core investment focus.

Paulson is bullish on gold in the long term: Central bank gold purchases are reshaping the reserve system.

As gold prices hover below $4,100 under pressure, veteran gold bull Paulson maintains his optimistic outlook, believing the long-term upward trend in gold is far from over. His core logic rests on two points: first, public confidence in fiat currencies is gradually waning, leading to a continued rise in demand for gold as an alternative asset; second, global central banks are continuously increasing their gold holdings. In an environment of increasingly fragmented global financial structures and countries pursuing diversification of foreign exchange reserves, gold is evolving into a high-quality reserve asset, gradually diverting a share of fiat currency reserves. Multiple surveys also confirm that central banks worldwide continue to prioritize gold as a reserve asset, providing a long-term foundation for gold prices.

Major shift in investment strategy: from physical gold to gold mining companies

Paulson has been a landmark gold bull in the market for the past two decades, but his portfolio structure has been adjusted several times. In 2009, he made a large purchase of GLD gold ETFs, holding over 31.5 million units at its peak. In the second quarter of 2022, he completely exited his physical gold-related positions. As of the latest disclosure, his $3.11 billion portfolio is almost entirely invested in gold and precious metals mining companies. Paulson's core view is that gold mining stocks offer greater profit elasticity than directly holding physical gold, and his investment focus should prioritize early-stage exploration-oriented small and medium-sized mining companies. During a gold price uptrend, high-quality gold mining companies can fully benefit from rising gold prices, with profit elasticity significantly higher than that of physical gold.

Major asset integration completed, betting on NOVAGOLD and Tanglin gold mine projects.

NOVAGOLD recently announced an agreement to acquire a 40% stake in the Downing gold mine from Paulson & Co. in an all-stock transaction. Following the transaction, NOVAGOLD's existing shareholders will hold 65% of the combined entity, while Paulson & Co. will enjoy 40% of the economic benefits, with voting rights capped at 19.99%. Paulson will serve as co-chairman. The Downing gold mine is a top-tier undeveloped gold mine globally, with proven and probable resources of approximately 40 million ounces and an average grade of 2.22 grams per tonne, far exceeding the average level of similar projects. Paulson stated that gold mining companies like NOVAGOLD are the preferred targets for investing in gold. NOVAGOLD management stated that this integration will streamline the operational structure, and the company's next focus will be on updating the project's feasibility study report.

Summarize

In summary, although gold prices have encountered resistance and fluctuated around the $4,100 mark in the short term, Paulson maintains that the long-term bull market for gold has just begun. The two main drivers—central bank gold purchases and declining trust in fiat currencies—remain valid in the long term. Of particular note is his strategy shift: abandoning direct bets on physical gold and focusing entirely on gold mining stocks, especially early-stage exploration targets. The successful integration of the Tanglin gold mine assets is the core of this investment strategy. This also signals that in the mid-stage of a bull market, funds are beginning to chase mining stocks with leverage. Going forward, it will be crucial to observe whether gold prices can break through the $4,100 resistance level, and the project progress and cost control of gold mining companies will be key variables influencing the performance of mining stocks. Spot gold daily chart source: FX678. As of 12:06 PM Beijing time on July 24, spot gold was trading at $4029.71 per ounce.