Recently, international gold prices have hovered near the $4,100 per ounce level, with market sentiment remaining heavily cautious. However, legendary investor John Paulson has not wavered in his confidence regarding the long-term prospects of gold. In a recent interview, he stated clearly that the current gold bull market is still in its early stages. Compared to holding physical gold or exchange-traded funds directly, gold mining stocks, particularly those in early development stages, often possess greater upside potential.

Paulson pointed out that as investors' trust in the fiat currency system gradually declines, the importance of gold as an alternative asset is becoming increasingly prominent. Meanwhile, the trend of continuous accumulation by global central banks provides solid long-term support for gold prices. Against the backdrop of rising geopolitical risks, expanding fiscal deficits, and intensified concerns over currency devaluation, more central banks are choosing to increase gold allocation to diversify foreign exchange reserve risks and reduce dependence on a single fiat currency. This trend is not expected to end in the short term. As long as central bank demand remains strong, the supply and demand structure of gold will continue to benefit.

It is worth noting that Paulson's investment strategy has undergone significant changes in recent years. As early as 2009, he heavily invested in one of the world's largest gold ETFs, with holdings peaking in 2011. However, by 2022, he had largely exited investment methods focused on physical gold and ETFs, shifting his focus entirely to gold and precious metal mining companies. Position filings disclosed in May this year show that his public equity portfolio, sized at approximately $3.11 billion, is almost entirely concentrated in the gold mining sector. Paulson believes that investing in junior mining companies in early exploration and development stages is an effective way to participate in the long-term upward trend of gold. Although such companies face high risks such as exploration failure and rising costs, once projects proceed smoothly, their valuation upside far exceeds that of mature producers.

This strategy has been validated by specific projects. Recently, NOVAGOLD announced signing a final agreement to acquire the 40% stake in the Donlin Gold project held by Paulson through an all-share transaction. Upon completion, funds under Paulson will hold approximately 40% economic interest in the merged company and he will serve as co-chairman alongside the counterparty's chairman. Donlin Gold is regarded as one of the largest undeveloped gold deposits in the world, possessing about 40 million ounces of proven and controlled resources, with an average grade significantly higher than similar large projects globally. Paulson emphasized that investing in enterprises owning large high-quality resources but not yet entering full production stages can more effectively capture gold bull market returns. Company management also stated that this transaction will simplify operations and equity structure, helping to concentrate resources on updating the project's feasibility study.

The core logic behind the optimism for gold mining stocks lies in their operating leverage regarding gold price changes. Mining, labor, and equipment costs for gold production enterprises are relatively fixed. When gold prices rise, the portion exceeding costs converts directly into profit, making corporate earnings growth often faster than the gold price itself. Of course, mining stock performance does not simply follow gold prices; energy costs, capital expenditure, political risks, and management execution all affect final returns. For junior gold mining companies not yet in production, valuation relies more on future resource development prospects, and stock price volatility may be more intense. Although gold prices are still consolidating at key levels in the short term, based on macro factors such as central bank accumulation, declining fiat trust, and global financial system fragmentation, the long-term growth logic for gold demand remains solid. Using mining stocks to amplify bull market returns has become a new choice for some seasoned investors.