John Paulson Spencer Platt/Getty
John Paulson, a legendary investor, criticized crypto and advocated gold in an interview with Bloomberg TV.
Crypto was described by him as a "limited supply" of nothing, referring to the fixed amount that some coins have.
Bloomberg was told by Paulson that he is now bullish on gold to protect against rising inflation.
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John Paulson, the legendary investor and bettor who lost to the housing market in 2008, became a billionaire. He criticized crypto and advocated gold in an interview with Bloomberg TV.
Paulson said that cryptocurrencies were a bubble. He quit hedge fund after making his company $20 billion. He described crypto as "a limited supply of nothing", referring to the fixed amount that certain coins have, such as bitcoin's 21,000,000 token cap. However, others have no such limit.
"Cryptocurrencies will eventually become worthless, no matter where they trade today. They will become worthless once the exuberance fades or liquidity runs dry. He said that cryptocurrencies are not something he would recommend to anyone.
Paulson was asked why he didn't short crypto. He pointed out the volatility of the asset class and said that a short bet could bring down his long-term success, even if he is right.
Paulson, who had a preference for buying gold, said to Bloomberg that he is now bullish on the precious metal due to its ability to perform well in high-inflation times.
Paulson stated that gold is the best place to invest in as inflation increases. The supply and demand imbalance in gold is due to the fact that money is trying to move from cash and fixed income to investable gold.
Some academics have looked skeptically on the gold-as-an-inflation-hedge view. A Duke professor and former portfolio manager discovered that gold's inflation-hedge property only holds for a century. They found that the relationship is broken down on shorter timescales.
Gold bugs and crypto enthusiasts have sometimes been at odds. Each camp offers their preferred asset to be the best hedge against inflation.
Paulson says that investors often make the most common mistakes when looking for quick schemes to get rich or buy based on stories rather than on fundamentals.
"And then they chase investments going up, and eventually those investments deflate. He said that they then lose their money.
