Billionaire hedge fund manager John Paulson believes the gold bull market that captured headlines in 2025 is far from over, telling CNBC that the world is in the early stages of a long-term upward cycle driven by declining confidence in fiat currencies — particularly the U.S. dollar.

Gold peaked just above $5,500 an ounce in January before undergoing a sharp correction. Following a brief surge in safe-haven demand during the early days of the U.S.-Iran conflict, the metal has traded in a range between $4,000 and $4,500 for the past several months. While some analysts have interpreted the sell-off as the end of the bull run, Paulson disagrees.

"I do think we're in the beginnings or the early stages of a long-term bull market for gold."

Paulson, who famously profited from betting against subprime mortgages in the early 2000s while mainstream analysts dismissed concerns in that sector, shifted his focus to gold after the 2008 financial crisis. He argued at the time that unprecedented fiscal and monetary stimulus would ultimately weaken the dollar — a thesis that has played out measurably. Based on CPI data, the dollar has lost approximately 35 percent of its purchasing power since 2008, a figure that likely understates the true extent of inflation. Over the same period, the price of gold has nearly quadrupled.

Paulson attributes gold's long-term strength to a fundamental shift in how the world views paper money. "As people lose faith in paper currencies, gold as an alternative will continue to grow."

This growing preference is reflected in both central bank and private-sector demand. "Gold is becoming the most apt reserve currency in the world, replacing fiat currencies," Paulson said. "The demand from central banks, for instance, has continued to grow, as has the private sector."

The buying has been concentrated among emerging market central banks. The People's Bank of China, the Reserve Bank of India, and the central banks of Turkey and Poland have been among the most active accumulators in recent years — the same countries at the forefront of BRICS-led de-dollarization discussions aimed at reducing dependence on the dollar in cross-border trade and settlement.

The European Central Bank confirmed earlier this year that gold has surpassed Treasuries to become the world's top reserve asset. Last year marked the fourth-largest expansion of central bank gold reserves on record, totaling 863 tonnes. While that figure was down 21 percent year-on-year, it remained well above the 2010–2021 annual average of 473 tonnes. The all-time record was set in 2022 at 1,136 tonnes — the highest level of net purchases on record dating back to 1950, encompassing the period since the 1971 collapse of the Bretton Woods system, when President Nixon suspended dollar convertibility into gold.

Given ongoing de-dollarization trends and mounting distrust of fiat currencies broadly, Paulson expects gold's long-term trajectory to remain upward despite current headwinds. "I think the trend of gold will continue to be on the upside."

Concerns about fiat currencies are also visible in an increasingly bearish bond market. Despite rate cuts in 2024 and the Federal Reserve's more recent reluctance to raise rates amid persistent inflation, yields on the long end of the curve have continued to creep higher, signaling investor reluctance to extend credit to fiscally irresponsible governments.

As Reuters recently reported: "Inflation, heavy government borrowing, policy uncertainty and bouts of stocks and bonds falling in tandem have weakened bonds' role as a ballast, prompting some investors to look for more diversification."

Paulson is not alone among institutional investors in his bullish gold outlook. Last year, Morgan Stanley CIO Michael Wilson recommended an aggressive portfolio rebalancing, suggesting investors reduce bond allocations to 20 percent and shift half of the remaining bond portfolio into gold as a "more resilient" inflation hedge.

"Gold is now the anti-fragile asset to own, rather than Treasuries," Wilson said. "High-quality equities and gold are the best hedges."