Gold-plated billionaires
For years I have abided by the idea that gold is useless. As Charles Munger noted; if you buy an ounce of gold today, at the end of eternity, you will still own an ounce of gold. With no industrial use and producing no income, Munger’s partner, Warren Buffett, noted gold is only good for doing two things: ‘looking and fondling’. They are right in the sense that, without any ability to compound or any commercial value, buying gold is a bet that others will subsequently buy gold at a higher price. In that sense, buying gold is speculation rather than investing.
I remain convinced, buying gold is, and will always be, a bet on fear.
In recent times, other billionaires, including John Paulson, Ray Dalio, Thomas Kaplan, Stanley Druckenmiller and Eric Sprott have ignored Buffet and Munger and made significant allocations to gold, driven by a combination of geopolitical uncertainties, economic shifts, and the metal’s appeal as a ‘safe haven asset’, whether misplaced or not. With gold prices hitting a record above US$3,500 per ounce in April, their various forecasts predict a climb to nearly US$5,000 by 2028 and indicate they believe the boom may not be over.
Certainly, if Trump’s tariff war incited a stagflationary bust in the U.S., few assets would perform. Gold may be the only one as investors rotate out of investments they fear may fall in market value. While that could be one reason for their interest, what else is fuelling the trend among this admittedly very select bunch of ultra-wealthy professional investors? More importantly, are they presenting anything other than a bet on the fear of something?
Read on and decide for yourself.
Geopolitical instability and loss of faith in paper currencies
One of the primary catalysts for gold investments is the erosion of trust in traditional financial systems, particularly in U.S. dollar-based assets. The 2022 confiscation of Russia’s foreign reserves by western nations following its invasion of Ukraine sent shockwaves through global markets. As John Paulson has frequently noted, while Russia’s physical gold remained secure, its paper reserves – cash and treasuries – were frozen, rendering them inaccessible. This event served as a wake-up call for central banks and wealthy individuals alike, particularly in nations like China, which have since accelerated their gold purchases.
Unlike fiat currencies, which may be subject to government policies and sanctions, gold’s physical nature makes it a hedge against such risks. It follows the fear of similar asset seizures in future conflicts has prompted some billionaires to view gold as a reliable store of value that cannot be easily confiscated or devalued during geopolitical conflict.
Ray Dalio, a billionaire and founder of the world’s largest hedge fund, Bridgewater Associates, has explicitly recommended gold as a hedge against geopolitical risks and currency devaluation. Last year, he emphasised gold’s value during periods of geopolitical conflict, noting it is “independent of any one nation’s economy” and it becomes more valuable amid tensions between global powers like the U.S. and China. Dalio also pointed to central bank gold purchases as a sign of declining reliance on the U.S. dollar, aligning with the fear of paper currency confiscation or devaluation seen in events like Russia’s reserve freeze.
Global trade tensions and tariff policies
Rising trade tensions, particularly driven by U.S. tariffs under Trump, have further bolstered gold’s appeal. Tariffs and trade wars create uncertainty in global markets, weakening faith in the stability of fiat currencies like the U.S. dollar. Billionaire American hedge fund manager and investor John Paulson has explained that when confidence in the dollar wanes, gold emerges as a preferred reserve asset. His view is supported by Deutsche Bank analysts and strategists, who predict gold prices will reach US$3,700 per ounce by 2026, driven in part by trade-related uncertainties.
Betting that gold will serve as a buffer against the economic fallout of protectionist policies is a bet on the fear such a fallout will occur. As tariffs disrupt supply chains and inflate costs, gold’s role as an uncorrelated asset – one that often moves independently of stocks and bonds – becomes interesting, if not increasingly valuable. This makes it a potentially valid option for diversifying portfolios in turbulent times.
Paulson has also explicitly linked global trade uncertainty, particularly Washington’s tariffs, to gold’s appeal as a reserve currency. He stated, “The best place to go if your faith in the (U.S.) dollar diminishes is gold as a reserve currency,” reflecting his belief that trade tensions undermine the dollar’s stability. Putting his money where his mouth is, his investments in U.S. gold mining projects, such as Perpetua Resources and NovaGold, further highlight his strategic bet on gold amid trade-related economic disruptions.
Central Bank gold buying and market momentum
Central banks, particularly those of China, India, and Turkey, have aggressively accumulated gold reserves in recent years. According to the World Gold Council, global central bank gold purchases reached 1,037 tonnes in 2024, one of the highest levels on record. This institutional buying creates a positive feedback loop, driving up gold prices and attracting billionaire investors who see the trend as a validation of gold’s long-term value.
For billionaires like Paulson, central bank activity signals a structural shift in the global financial system. As these institutions diversify away from U.S. treasuries and into gold, some wealthy individuals are front-running the buying and following suit, anticipating the metal’s price will continue to climb. This one’s a fear of missing out (FOMO). Recent reports indicate central bank buying is not slowing down, and central banks are expected to maintain high levels of gold purchases through 2025.
Billionaire American investor and founder of the Electrum Group, Thomas Kaplan, is a major investor in gold mining ventures like Sunshine Silver & Refining, which partners with Perpetua Resources (where Paulson is also invested). While Kaplan has not made any recent public statements specifically citing central bank buying, his heavy involvement in gold and antimony projects possibly aligns with the trend of central banks accumulating gold reserves and suggests he’s riding the wave of institutional buying.
Gold’s role as an inflation/devaluation hedge
With inflation remaining a concern in many economies, gold’s historical role as an inflation hedge is another draw for some of these billionaires. While inflation has moderated from its 2022 peak, uncertainties around monetary policy and government spending continue to loom large. Gold’s claimed ability to retain value (but it hasn’t always) during periods of currency devaluation makes it a go-to asset for preserving wealth.
Paulson’s investments in U.S. gold mining projects, such as Perpetua Resources and NovaGold’s Donlin project, reflect a strategic move to capitalise on rising gold prices while supporting domestic production. These projects not only promise financial returns but also align with broader economic goals, such as reducing reliance on foreign minerals – a priority underscored by the Trump administration’s “America First” agenda.
Renowned hedge fund manager, Stanley Druckenmiller, has historically advocated for gold as an inflation hedge. He has stated that gold is a strong asset to hold during periods of monetary expansion and inflationary pressures, particularly when central banks engage in excessive money printing. His consistent positioning in gold aligns with an ongoing concern about inflation, which is widely cited as a driver for gold prices in 2025.
Strategic investments in gold mining
Beyond buying physical gold, some of these billionaires appear to be increasingly investing in gold mining companies to gain exposure to the metal’s rising value. Paulson’s stakes in Perpetua Resources, NovaGold, International Tower Hill, and Trilogy Metals are just a few examples. These investments offer leveraged exposure to gold prices: at fixed or lower production costs, as the price of gold rises, the profitability of mining operations increases significantly, potentially yielding higher returns than holding physical bullion.
Moreover, mining investments align with national security interests, particularly in the U.S., where domestic production of critical minerals like antimony (a byproduct of Perpetua’s gold operations and used primarily in alloys, flame retardants, electronics, and military applications like bullets and batteries) is seen as vital for defence purposes. The U.S. government’s support for projects like Perpetua’s, including potential funding from the Export-Import Bank, adds a layer of stability to these investments, no doubt appealing to the likes of Paulson, who has stated, “Other minerals are a whole different world, so we’re concentrating our efforts in gold,” indicating a deliberate strategy to gain leveraged exposure to rising gold prices through mining. He is equally focused on low-cost operations like Donlin (with cited but unconfirmed costs of between US$635-1,000 per ounce), revealing a nuanced and calculated bet on mining profitability.
Psychological and cultural appeal of gold
Gold’s allure is not purely financial. It’s common to see eyes light up and eyebrows rise when a serious amount of physical gold is handed to an individual. It has carried a psychological and cultural weight for a millennium. As a tangible asset with an epochal reputation as a store of value, gold evokes a sense of permanence and security in an increasingly digital and volatile world. Owning gold – whether in physical form or through mining investments – can serve as a status symbol and a hedge against systemic risks that even vast fortunes cannot fully insulate against.
Describing gold as “the ultimate insurance policy” for the wealthy (remember it has no utility and produces no income) becomes more common in times of uncertainty, when traditional public market investments like stocks and real estate may feel vulnerable to market swings or policy changes.
Eric Sprott, a Canadian billionaire investor and founder of Sprott Inc., is a well-known gold advocate. Sprott has consistently emphasised gold’s psychological and cultural significance as a “trusted” asset during times of economic uncertainty. In 2023, speaking to gold trader digital news site, Kitco News, Sprott described gold as “the ultimate safe haven” that people instinctively turn to when they lose faith in financial systems. In 2024, Sprott cited gold’s enduring appeal in its ability to provide “peace of mind” for investors wary of market volatility or currency devaluation.
Sprott’s extensive investments in gold mining companies and physical gold through Sprott Physical Gold Trust reflect his belief in gold’s emotional and cultural resonance as a hedge against systemic risks.
The billionaire migration to gold is not widespread but those who are flocking to gold are betting on fear. It might be the fear surrounding a shifting global landscape, geopolitical risks, trade tensions, central bank buying, devaluation, fiat currency rejection or inflation, but it is fear. Whether you’re a billionaire with a well-crafted thesis for buying gold or not, at its core, buying gold remains a bet on increasing fear in something.
Roger Montgomery is the Founder and Chairman of Montgomery Investment Management. Roger has over three decades of experience in funds management and related activities, including equities analysis, equity and derivatives strategy, trading and stockbroking. Prior to establishing Montgomery, Roger held positions at Ord Minnett Jardine Fleming, BT (Australia) Limited and Merrill Lynch.
He is also author of best-selling investment guide-book for the stock market, Value.able – how to value the best stocks and buy them for less than they are worth.
Roger appears regularly on television and radio, and in the press, including ABC radio and TV, The Australian and Ausbiz. View upcoming media appearances.
This post was contributed by a representative of Montgomery Investment Management Pty Limited (AFSL No. 354564). The principal purpose of this post is to provide factual information and not provide financial product advice. Additionally, the information provided is not intended to provide any recommendation or opinion about any financial product. Any commentary and statements of opinion however may contain general advice only that is prepared without taking into account your personal objectives, financial circumstances or needs. Because of this, before acting on any of the information provided, you should always consider its appropriateness in light of your personal objectives, financial circumstances and needs and should consider seeking independent advice from a financial advisor if necessary before making any decisions. This post specifically excludes personal advice.
