John A. Paulson, the founder of Paulson & Co., who argues that Bitcoin and cryptocurrencies are bubbles, says that the value of gold will increase as the US dollar falls. And that reflects the hedge fund manager’s outlook for this year, the next three years, and the next five years.
“Bitcoin bubble, dollar will fall, yellow metal will rise!”
Famous billionaire John Paulson emphasizes that he is not a fan of cryptocurrencies. According to Paulson, all cryptos, including Bitcoin, are a bubble. The billionaire investor argues that cryptocurrencies have no real intrinsic value. For example, he believes that Bitcoin (BTC) is popular only because of limited supply. However, Paulson has one investment instrument he loves: gold.
There has been a significant increase in central banks’ demand to replace the dollar with gold, and we are only at the beginning of this trend. In an interview with journalist Alain Elkann, Paulson said, “Gold will rise and the dollar will fall. Therefore, at this point, it would be better to keep your investment reserves below. Paulson sees the potential for gold to be appreciated and recommends playing the long game. He highlights the de-dollarization trend and notes that gold is attracting new investors with sticky inflation fears and new geopolitical tensions. In this context, Paulson makes the following statement:
The dollar is still very dominant in terms of reserves and trade. However, the US economy after World War II is not as strong as it used to be. Other countries don’t want to rely on the dollar as much as they did in the past, and the United States has a huge deficit in trade and investment balances with the rest of the world. This used to be very positive, but now very negative.
Anti-Bitcoin Paulson: Gold is rising again!
Stating that the US dollar is also looking at depreciation against other currencies, John Paulson points to large money printing, fiscal spending, previous quantitative easing and inflation. In this regard, he makes the following statement:
If you have dollars and 9% inflation, you lost 9% of your money this year. Because interest rates were not close to making up for this loss. This is pushing investors and central banks around the world to seek an alternative reserve currency, and gold is rising again.
“We are at the beginning of the trends that will increase the demand for gold”
Gold represents a legitimate alternative to dollars and other fiat currencies. cryptocoin.com As you follow, countries like China are admitting that their USD reserves may be frozen for fear of increasing sanctions. Paulson notes:
If you keep your money in fiat currencies, you risk having your reserves confiscated due to geopolitical events. Just like central banks did to Russia. Since China has the majority of its reserves in dollars, he thinks that if it gets into a geopolitical argument with the Western world over Taiwan or something else, those reserves are likely to be frozen, just like Russia.
The billionaire states that there is no such risk when it comes to physical gold, and that there is a very high probability that the price of precious metal reserves will increase. Paulson said, “We are at the beginning of the trends that will increase the demand for gold, and the rate of increase of gold will be determined by inflation and geopolitical tensions. “This year, gold will appreciate against the dollar and also on a three-, five-, and ten-year basis.”
The biggest bubble created by the Fed: Bitcoin and crypto
On the Federal Reserve, Paulson says the US central bank could raise another 50-100 basis points before pausing. In this context, “Many expect the Fed to start easing in the second half of the year. But inflation will be more persistent than markets currently perceive. They’ll probably raise it another 50, 75, 100 basis points in the next few meetings. Then they will hold it there until they experience a serious economic shock,” he predicts.
Paulson describes cryptocurrencies like Bitcoin as the ‘biggest bubble’ the Fed has created through massive money printing. Accordingly, “Crypto is one of the most ridiculous investment vehicles ever created,” he says. The leading investor says it has no intrinsic value and predicts that the crypto market will lose its remaining value over the next 48 months. He explains his thoughts on this matter as follows:
The cryptocurrency has lost between 70% and 75% of its value since its peak and I think it will lose most of its remaining value over the next two years. It is very unfortunate that so many people lose so much money investing in crypto.
