Earlier this week we mentioned that hedge fund manager John Paulson, who made his fortune betting against the housing market, is moving forward with plans to pounce on cheap real estate.
Prior to that Paulson was betting on gold, taking sizable stakes in some gold miners.
The Pragmatic Capitalist smartly connects the dots:
Stringing together the recent SEC filings of John Paulson, the billionaire hedge fund manager, makes one thing clear: he is betting big on the reflation trade. Paulson’s latest 13-F filing shows large positions in Anglogold, Kinross gold, Gold Fields, market vectors gold ETF and the S&P gold ETF. More interesting is a recent filing by Paulson to start raising money for a hundred million dollar “real estate recovery” fund.
At first, the news of large gold purchases early last month were seen as potential armageddon plays based on Paulson’s big bets on the collapse of the economy last year, but it’s now clear that Paulson is betting big on inflation in the coming years.
This would certainly fit in with what the big chatter is all about today.
You’ve got higher oil and gold, serious dollar weakness, and Bob Pisani talking all about the “reflation trade”. John Paulson may be more aggressive about this than anyone else.
But while it’s certainly true that the government is printing money, you’re still fighting another huge trend, which is that all around the world, nervous market participants are essentially selling regular assets to buy normal-old dollars, potentially creating a whoosh in the other direction.
As the pseudonymous blogger Nemo at Self-Evident, suggests, what appears to be stability may actually be the mask of a wild, tug-of-war between competing economic views. Lately the inflationists have been winning out.
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