Billionaire investor John Paulson: The Fed may cut rates aggressively, and gold is expected to hit new highs
Billionaire investor and hedge fund veteran John Paulson said on Friday that he would like to see the Fed start cutting rates aggressively.
The Federal Reserve is expected to cut its benchmark interest rate on Wednesday, but traders are divided on the extent of the cut. The Fed seems to be considering a 25 basis point or 50 basis point cut. One basis point is equal to 0.01 percentage point.
Paulson said on CNBC's "Money Movers" on Friday that he thinks a 50 basis point cut is more appropriate.
"I think the Fed is a little behind the curve... I think they've seen enough data to start cutting rates, and I would suggest that a more aggressive cut would be better," he said.
One asset class that usually rises when the Fed cuts rates is gold, and Paulson has long been bullish on gold. He said one reason gold is near its all-time high is the interest of foreign governments.
"I think the main reason gold is rising is the decline in global confidence in paper money, especially among central banks," Paulson said. He added that allocating 10% of assets to gold might be "prudent" for investors, but he did not make a clear recommendation.
Paulson said his portfolio includes both stocks and gold-related derivatives. His family office, Paulson & Co., holds several gold mining stocks, including Agnico Eagle Mines (AEM), according to VerityData.
Paulson, a Trump campaign donor, warned that the stock market would "crash" if some of the tax proposals in Vice President Kamala Harris' campaign were implemented. He also said that despite concerns about the federal government's debt, he is not currently shorting U.S. Treasuries.
Paulson is a veteran in the hedge fund world, best known for his shorting of the housing market before the 2007 market crash. Paulson announced in 2020 that he would convert his hedge fund into a family office.
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The underlying logic of stock market trading is to stifle human nature
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54088 FROM MBS : wow
liquidgold : Nah. He just wish. Fed has more to consider than meets his demands
FENNY CHEE :