After 15 Years, John Paulson Is Finally Winning Big on Gold

Dow Jones Newswires

By Caitlin McCabe and Joe Wallace

John Paulson made a vast fortune betting against the U.S. housing market in what was dubbed "the greatest trade ever." And his next act — a yearslong wager on gold — is finally turning out to be a another great trade.

More than a decade and a half after Paulson went big on gold, the billionaire investor has emerged as one of the winners from the record-setting surge in the price of the precious metal.

President Trump's trade war and threats to fire the head of the Federal Reserve shook confidence in the dollar and propelled gold prices above $3,500 a troy ounce last week. Gold rose this year even as stocks and bonds floundered.

Rather than cashing out, Paulson is doubling down, tossing in $800 million to buy a big stake in a remote gold mine in a rugged region of southwestern Alaska.

"There's only one reserve that in physical form will protect you against all these things for literally millennia," said Paulson, rattling off a list of scenarios ranging from inflation to the confiscation of assets by governments.

Gold has been prized at least as far back as ancient Egypt, where King Tut was buried with a golden mask. It functioned for a long time as the bedrock of the monetary system. While President Richard Nixon unpegged the dollar from gold in 1971, tons of the metal still sit at Fort Knox and in central-bank reserves globally.

Survivalists and big money managers alike assert that gold is a proven hedge against various shocks: inflation, war, catastrophe and currency devaluation. Most of those crises aren't currently materializing in the U.S. But global geopolitical tensions, combined with a sliding dollar and expectations that central banks will keep buying the metal, have strengthened Paulson's conviction in bullion.

Owning gold isn't always a winner. It costs money to store and doesn't pay interest, as bonds do. And there have been long stretches during which stocks and bonds have left gold in the dust.

Paulson became a gold believer when he was relishing the riches of his bet that the U.S. housing market would collapse. His hedge-fund firm had just made $15 billion in 2007, with Paulson's personal cut amounting to nearly $4 billion — equivalent to more than $10 million a day.

The Fed had embarked on quantitative easing in response to the 2008-09 financial crisis, and Paulson worried the program would lead to a surge of inflation.

He piled into gold when it traded at around $900 a troy ounce. His early bets paid off. He at one point offered investors gold-denominated versions of his hedge-fund strategies.

But Paulson's expectation of an inflation burst never materialized, and parts of his wagers — including bets on mining stocks — suffered. Investments in other sectors, such as pharmaceutical companies and bank stocks, also dragged on returns.

He converted his hedge-fund firm into a private investment manager in 2020, handling money for himself, his employees and related entities.

In the years since, he became entangled in a bitter legal dispute with a former employee whom he fired in Puerto Rico, hosted a fundraiser for Trump at his Florida mansion and was briefly considered to be in the running for Treasury secretary.

Gold eventually started to glitter again, burnished by Covid-era stimulus, inflation, war and sanctions.

Paulson doesn't disclose the entirety of his gold holdings. He has exposure to the metal through derivatives positions, he said, but mostly invests through miners. He doesn't own physical gold.

His investments in listed mining companies are valued at around $840 million, according to Marcelo Kim, a partner at Paulson's investment firm who oversees gold investments. All eight of the mining stocks he reported holding to U.S. regulators as of December are up this year — with many of them increasing more than 30%.

As Paulson sees it, miners' profits increase — sometimes several times over — as gold prices rise, while the costs of mining remain relatively fixed. He still sees room for profit even if the metal's price retreats.

Most of his current bets are on upstart miners. Through his private investment firm, Paulson & Co., he owns stakes in companies including Perpetua Resources, Agnico Eagle Mines and International Tower Hill Mines.

"We really shifted our focus to mine development because that's where you can get your biggest bang for the buck," Paulson said. "You don't need the gold price to go up to receive high returns."

Kim has visited some 150 mines in Africa, Australia, Asia, Europe and North America, including the gold deposit in Alaska that Paulson agreed to invest in last week.

To buy the stake in the Alaskan mine, Paulson teamed up with fellow a gold advocate, Thomas Kaplan, chair of the exploration company NovaGold Resources. They purchased Barrick Gold's 50% stake in the Donlin project in Alaska for $1 billion. Paulson's $800 million contribution gives him a 40% stake in the mine.

Paulson is looking at what he believes will be a windfall at Donlin: The undeveloped high-grade deposit contains an estimated 39 million ounces of gold, equivalent to about a quarter of the holdings at Fort Knox.

It is a big undertaking . A 2021 technical report suggested that capital costs would be about $7.4 billion, plus $1.7 billion over the mine's life.

A 30-mile road to the nearest port and a natural-gas pipeline might need to be built, according to the Alaskan natural-resource department. The closest population center to the mine site, which sits on native lands, is a tiny village called Crooked Creek. Industry players said even if everything goes to plan, the mine isn't likely to start producing gold until the early 2030s.

"This is going to be a monster asset that's going to last for 50 years plus," Paulson said.

Write to Caitlin McCabe at caitlin.mccabe@wsj.com and Joe Wallace at joe.wallace@wsj.com

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Sector Update: Energy Stocks Decline Late Afternoon

MT Newswires

Energy stocks were softer late Friday afternoon, with the NYSE Energy Sector Index 0.3% lower and the Energy Select Sector SPDR Fund (XLE) shedding 0.4%.

The Philadelphia Oil Service Sector index was down 0.4%, and the Dow Jones US Utilities index eased 0.3%.

Front-month West Texas Intermediate crude oil rose 0.7% to $63.25 a barrel, and the global benchmark Brent crude contract advanced 0.8% to $67.05 a barrel. Henry Hub natural gas futures added 1% to $3.13 per 1 million BTU.

In corporate news, Ring Energy shares gained 3.6%. The company late Thursday reaffirmed its oil and sales volumes forecast despite cutting its outlook for Q2 capital spending following a recent decrease in oil prices.

American Water Works is expected to post Q1 earnings ahead of consensus thanks to a strong pickup in revenue recoveries during the early part of the year, UBS said. UBS downgraded the stock to neutral from buy, but raised its price target by $4 to $160. American Water shares were down 1.4%.

Portland General Electric shares were falling 3.8%. The company reported Q1 net income of $0.91 per share, down from $1.08 a year ago. Analysts polled by FactSet expected $0.93.

BP activist investor Elliott Investment Management wants a new person to head the company's strategy and succeed Giulia Chierchia, who leads its strategy, sustainability, and ventures arm, Reuters reported. BP shares added 0.4%.

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ICE Review: Canola Hits Highest Prices in 16 Months

Dow Jones Newswires

WINNIPEG, Manitoba--Intercontinental Exchange canola futures extended its rally on Friday to a fourth consecutive session. Prices finished at levels not seen since December 2023.

Tightening canola supplies continued to be a major driver in the upswing. The Canadian Grain Commission reported canola exports surpassed 7.50 million tonnes this week, the same amount Agriculture and Agri-Food Canada projected for 2024/25. There are still 15 weeks left in the marketing year.

An analyst suggested AAFC could go negative with its estimate on feed waste dockage for canola until Statistics Canada revises its call on the oilseed's production for 2024/25. However, should that occur, it wouldn't be until September at the earliest.

Outside support for canola was mixed on Friday. There were gains in Malaysian palm oil and Chicago soymeal but declines in Chicago soybeans and soyoil while European rapeseed was mostly lower. Upticks in crude oil spilled over into the vegetable oils.

The Canadian dollar inched up on Friday afternoon with the loonie at 72.14 U.S. cents compared to Thursday's close of 72.09.

There were 58,308 contracts traded on Friday, compared to 58,092 on Thursday. Spreading accounted for 30,584 contracts traded.

Prices are in Canadian dollars per metric tonne:

 
           Price      Change 
May       697.30     up 4.90 
Jul       701.80     up 4.40 
Nov       660.40     up 3.30 
Jan       666.10     up 5.00

Spread trade prices are in Canadian dollars and the volume represents the number of spreads:

 
Months    Prices                            Volume 
May/Jul   4.00 under to 6.40 under           6,613 
May/Nov   36.90 over to 31.00 over               7 
Jul/Nov   43.80 over to 35.30 over           5,630 
Jul/Jan   35.70 over to 31.80 over              10 
Jul/Mar   36.30 over to 28.70 over               3 
Nov/Jan   3.10 under to 6.10 under           1,862 
Jan/Mar   1.90 under to 4.60 under             844 
Mar/May   1.00 under to 3.00 under             123 
May/Jul   1.40 under                           200

Source: Commodity News Service Canada, news@marketsfarm.com

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Nymex Platinum, Palladium Warehouse Stocks - Apr 25

Dow Jones Newswires

Source: CME Group 
 
For previous business day 
PREV TOTAL subject to revisions. Source: CME Group 
 
                      Prev                         Net               Total 
Platinum             Total  Received Withdrawn  Change Adjustment    Today 
ASAHI DEPOSITORY LLC 
Registered               0         0        0       0         0          0 
Eligible                 0         0        0       0         0          0 
Total                    0         0        0       0         0          0 
 
BRINK'S, INC. 
Registered         110,968         0        0       0         0    110,968 
Eligible            20,678         0    2,437  -2,437         0     18,242 
Total              131,646         0    2,437  -2,437         0    129,209 
 
CNT DEPOSITORY, INC. 
Registered           1,246         0        0       0         0      1,246 
Eligible                 0         0        0       0         0          0 
Total                1,246         0        0       0         0      1,246 
 
DELAWARE DEPOSITORY 
Registered           3,825         0        0       0         0      3,825 
Eligible            21,450         0        0       0         0     21,450 
Total               25,275         0        0       0         0     25,275 
 
HSBC BANK, USA 
Registered           1,295         0        0       0         0      1,295 
Eligible            34,465         0      147    -147         0     34,318 
Total               35,760         0      147    -147         0     35,613 
 
INTERNATIONAL DEPOSITORY SERVICES OF DELAWARE 
Registered           3,394         0        0       0         0      3,394 
Eligible                 0         0        0       0         0          0 
Total                3,394         0        0       0         0      3,394 
 
JP MORGAN CHASE BANK NA 
Registered         120,414         0        0       0         0    120,414 
Eligible             1,144         0        0       0         0      1,144 
Total              121,558         0        0       0         0    121,558 
 
LOOMIS INTERNATIONAL (US) LLC 
Registered          86,076         0        0       0         0     86,076 
Eligible            33,285         0    5,545  -5,545         0     27,740 
Total              119,361         0    5,545  -5,545         0    113,815 
 
MALCA-AMIT USA, LLC 
Registered             395         0        0       0         0        395 
Eligible               197         0        0       0         0        197 
Total                  592         0        0       0         0        592 
 
MANFRA, TORDELLA & BROOKES, INC. 
Registered           5,501         0        0       0         0      5,501 
Eligible            11,398         0        0       0         0     11,398 
Total               16,900         0        0       0         0     16,900 
 
STONEX PRECIOUS METALS LLC 
Registered               0         0        0       0         0          0 
Eligible                 0         0        0       0         0          0 
Total                    0         0        0       0         0          0 
 
COMBINED TOTALS 
Registered         333,114         0        0       0         0    333,114 
Eligible           122,618         0    8,129  -8,129         0    114,489 
Total              455,732         0    8,129  -8,129         0    447,603 
 
                      Prev                         Net               Total 
Palladium            Total  Received Withdrawn  Change Adjustment    Today 
ASAHI DEPOSITORY LLC 
Registered               0         0        0       0         0          0 
Eligible                 0         0        0       0         0          0 
Total                    0         0        0       0         0          0 
 
BRINK'S, INC. 
Registered           6,057         0        0       0         0      6,057 
Eligible            15,930         0        0       0         0     15,930 
Total               21,987         0        0       0         0     21,987 
 
CNT DEPOSITORY, INC. 
Registered              97         0        0       0         0         97 
Eligible                 0         0        0       0         0          0 
Total                   97         0        0       0         0         97 
 
DELAWARE DEPOSITORY 
Registered             987         0        0       0         0        987 
Eligible             3,306         0       98     -98         0      3,208 
Total                4,292         0       98     -98         0      4,195 
 
HSBC BANK, USA 
Registered             586         0        0       0         0        586 
Eligible             2,623         0        0       0         0      2,623 
Total                3,209         0        0       0         0      3,209 
 
INTERNATIONAL DEPOSITORY SERVICES OF DELAWARE 
Registered               0         0        0       0         0          0 
Eligible                 0         0        0       0         0          0 
Total                    0         0        0       0         0          0 
 
JP MORGAN CHASE BANK NA 
Registered          12,746         0        0       0         0     12,746 
Eligible               728         0        0       0         0        728 
Total               13,474         0        0       0         0     13,474 
 
LOOMIS INTERNATIONAL (US) LLC 
Registered          10,011         0        0       0         0     10,011 
Eligible               301         0        0       0         0        301 
Total               10,312         0        0       0         0     10,312 
 
MALCA-AMIT USA, LLC 
Registered               0         0        0       0         0          0 
Eligible                 0         0        0       0         0          0 
Total                    0         0        0       0         0          0 
 
MANFRA, TORDELLA & BROOKES, INC. 
Registered           2,116         0        0       0         0      2,116 
Eligible               630         0        0       0         0        630 
Total                2,746         0        0       0         0      2,746 
 
STONEX PRECIOUS METALS LLC 
Registered               0         0        0       0         0          0 
Eligible                 0         0        0       0         0          0 
Total                    0         0        0       0         0          0 
 
COMBINED TOTALS 
Registered          32,599         0        0       0         0     32,599 
Eligible            23,518         0       98     -98         0     23,421 
Total               56,118         0       98     -98         0     56,020 
 
Write to Rodney Christian at csstat@dowjones.com

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Lean Hogs Settle at Highest Level in a YearMarket Talk

Dow Jones Newswires

Lean hog futures on the CME settle up 1.1% to $1.0125 a pound, their highest level in roughly a year. Lean hogs were last at the $1.01 a pound level in late April of 2024, according to FactSet data. Hogs close higher despite traders and analysts debating the status of pork demand amid a lower level of slaughters. "Traders are looking ahead and not seeing any increase in pork demand," says ADM Investor Services in a note. "Unless packers increase slaughters... this week's slaughter is going to be like a storm market without storms." Live cattle futures also rose, inching up 0.1% to $2.084 a pound — a fraction of a cent below the record-high close recorded in March, which was $2.08475 a pound. (kirk.maltais@wsj.com)

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Brent Settles Higher but Logs Weekly Loss

Trading Economics

Brent crude oil futures gained 0.5% to settle at $66.9 per barrel on Friday, but still posted a weekly loss of over 2% amid persistent oversupply concerns and uncertainty around U.S.-China trade talks.

Market sentiment remained cautious as reports indicated the U.S. and Russia are making progress toward ending the conflict in Ukraine, though key terms have yet to be finalized.

At the same time, several OPEC+ members are expected to advocate for a second consecutive month of accelerated output increases in June.

Kazakhstan, a significant member of the alliance, signaled it would prioritize national interests and not cut production at its major fields.

Conflicting statements from Washington and Beijing over tariff negotiations have added to the market’s volatility, despite indications that China may ease some levies on U.S. imports.

Adding to the geopolitical tensions, the U.S. imposed fresh sanctions this week on a key Iranian figure involved in crude and LPG shipping.

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CFTC Commitments: Nymex Harbor RBOB Gasoline Futures/Options - Apr 25

Dow Jones Newswires

GASOLINE RBOB - NEW YORK MERCANTILE EXCHANGE 
OPTION AND FUTURES COMBINED POSITIONS AS OF 04/22/25          | 
--------------------------------------------------------------| NONREPORTABLE 
      NON-COMMERCIAL      |   COMMERCIAL    |      TOTAL      |   POSITIONS 
--------------------------|-----------------|-----------------|----------------- 
  Long  | Short  |Spreads |  Long  | Short  |  Long  | Short  |  Long  | Short 
-------------------------------------------------------------------------------- 
(CONTRACTS OF 42,000 U.S. GALLONS)                   OPEN INTEREST:      412,306 
COMMITMENTS 
  77,873   53,636   91,751  222,954  246,424  392,577  391,811   19,729   20,495 
 
CHANGES FROM 04/15/25 (CHANGE IN OPEN INTEREST:     -9,250) 
   2,902    1,317   -4,550   -6,277   -4,864   -7,924   -8,097   -1,326   -1,154 
 
PERCENT OF OPEN INTEREST FOR EACH CATEGORY OF TRADER 
    18.9     13.0     22.3     54.1     59.8     95.2     95.0      4.8      5.0 
 
NUMBER OF TRADERS IN EACH CATEGORY (TOTAL TRADERS:      273) 
      77       63       89      103      120      223      234 
 
 
GULF COAST CBOB GAS A2 PL RBOB - NEW YORK MERCANTILE EXCHANGE 
OPTION AND FUTURES COMBINED POSITIONS AS OF 04/22/25          | 
--------------------------------------------------------------| NONREPORTABLE 
      NON-COMMERCIAL      |   COMMERCIAL    |      TOTAL      |   POSITIONS 
--------------------------|-----------------|-----------------|----------------- 
  Long  | Short  |Spreads |  Long  | Short  |  Long  | Short  |  Long  | Short 
-------------------------------------------------------------------------------- 
(CONTRACTS OF 42,000 GALLONS)                        OPEN INTEREST:       22,412 
COMMITMENTS 
       0        0        0   21,927   21,774   21,927   21,774      485      638 
 
CHANGES FROM 04/15/25 (CHANGE IN OPEN INTEREST:        -68) 
       0        0        0      -68      157      -68      157        0     -225 
 
PERCENT OF OPEN INTEREST FOR EACH CATEGORY OF TRADER 
     0.0      0.0      0.0     97.8     97.2     97.8     97.2      2.2      2.8 
 
NUMBER OF TRADERS IN EACH CATEGORY (TOTAL TRADERS:       28) 
       0        0        0       17       23       17       23 
 
 
GULF JET NY HEAT OIL SPR - NEW YORK MERCANTILE EXCHANGE 
OPTION AND FUTURES COMBINED POSITIONS AS OF 04/22/25          | 
--------------------------------------------------------------| NONREPORTABLE 
      NON-COMMERCIAL      |   COMMERCIAL    |      TOTAL      |   POSITIONS 
--------------------------|-----------------|-----------------|----------------- 
  Long  | Short  |Spreads |  Long  | Short  |  Long  | Short  |  Long  | Short 
-------------------------------------------------------------------------------- 
(CONTRACTS OF 42,000 GALLONS)                        OPEN INTEREST:       14,851 
COMMITMENTS 
   1,527      936        0   13,204   13,849   14,731   14,785      120       66 
 
CHANGES FROM 04/15/25 (CHANGE IN OPEN INTEREST:      1,162) 
     150      -50        0    1,012    1,212    1,162    1,162        0        0 
 
PERCENT OF OPEN INTEREST FOR EACH CATEGORY OF TRADER 
    10.3      6.3      0.0     88.9     93.3     99.2     99.6      0.8      0.4 
 
NUMBER OF TRADERS IN EACH CATEGORY (TOTAL TRADERS:       33) 
       1        2        0       20       20       21       22 
 
     Write to Valena Henderson at csstat@dowjones.com