John Paulson Cautious on U.S. Real Estate
“In my eyes, the major risk for the American recovery is the stagnation of the residential real estate market,” Paulson said, according to Les Echos. “It will be difficult to have a rebound in real estate prices this year.”
Paulson has a large percentage of his fund invested in U.S. financial stocks such as Bank of America (BAC), Citibank (C) and Capital One (COF)
Paulson also reiterated his bullishness for gold due to inflationary expectations going forward.
With inflationary risks in the next three to five years and the instability of the euro, gold provides protection against currency devaluation, he said.
Paulson started a Gold Fund and had $900 million in assets under management at the end of last year. Paulson's largest gold stocks are Anglogold (AU) and Gold Fields (GFI).
In short, he believes that money printing will ultimately lead to a good deal of inflation. He is convinced that gold will be a very good way to protect himself from the eventuality of currency debasement.
Previously Paulson keenly observed that if one thinks about gold in a three or five-year time horizon (instead of hour-to-hour/day-to-day/week-to-week), the probability increases of gold being higher over time.