Welcome back. John Paulson became a household name after betting that mortgage debt was egregiously mispriced during the housing bubble. After those days, he turned to gold, betting that fiscal and monetary stimulus would devalue the dollar. And as you can see from the chart here since 2009 when he launched that bet, the price of gold has quadrupled and Paulson is now pressing the bet, now set to become co-chair of Nova Gold, whose shares are up three and a half percent on this news today. Alongside another man who has made his fortune betting on precious metals as well and who currently serves as Nova Gold's chairman, Thomas Kaplan, who we hope will join us shortly. John, it's great to have you here. Welcome.
Yeah, thank you. Great to be here.
And let's just start with a, you know, as gold is about $1,000 or so off its highs this year, this parabolic move had everyone captivated. Now it's undergone a bit of a reset. Do you have conviction that 5,000, 10,000? What where is gold going? And is it still driven by the same forces that you originally identified, you know, years ago?
Yes. Great question. It's true. It's come off a little bit from its high this year, but it's also up 20, 20 plus, over 20% over the last year. So I do think we're in the beginnings or the early stages of a long-term bull market for gold. And gold is becoming the most sought-after reserve currency in the world, replacing fiat currencies. So as people lose faith in paper currencies, gold as an alternative will continue to grow, and the demand from central banks, for instance, has stayed strong, as has the private sector. So I think the trend of gold will continue to be on the upside.
Are there any other ways to express? You know, this is a very common and popular view, especially among younger investors. This was a Bitcoin kind of original motivation and things like that, the idea that dollar debasement is happening, that you have to protect yourself from it. You know, a lot of us can sit in the US and in a way, not you know, we benefit, I guess, if you're an asset owner, your real estate prices go up, your stock prices go up. You know, yes, inflation has been a factor as well. But are there any other ways that you would want to express this point of view?
I think the greatest way to invest is to invest in early stage gold stocks. So, Nova Gold, the reason why we're so focused on Nova Gold and why we announced the merger today is Nova Gold has 40 million ounces of gold indicated and measured resources and reserves. At the market cap of 4.2 billion, you're buying gold in the ground at only $119 per ounce. Of being the gold price of 4,200, you only paid less than 3% of the gold price. So I think it's the best way to play gold is through stocks like Nova Gold, if not Nova Gold itself.
Well, and your now co-chair, current chairman of the company, Thomas Kaplan, is here with us as well. Thomas, it's really a pleasure. You obviously have tons of experience investing in gold, precious metals, natural gas too, I believe. And John was just laying out the investment case. I mean, how could the market leave gold out there valued in this company at $119 an ounce? The ounce. Didn't somebody else figure this out?
Well, the short answer is that it won't. You know, Nova Gold was resurrected when John Paulson joined with Nova Gold to take Barrick out of their stake a little bit over a year ago, and the stock went from $3 to a high of 14 when the gold shares peaked. We fully expect to surpass that high. And the transaction that we've just announced is only going to add kerosene to the fire. Both John and I, we're both loving the idea of working together on this because we both bring similar philosophy and values, but also different skill sets into maximizing the value for the shareholders. The deal is incredibly accretive, but the most important aspect of this is that it puts under one roof 100% ownership of what will be the very largest gold mine in the United States. For the first time in decades, and for that reason, we really do believe that we will be the go-to stock in the space. And we're both very committed to seeing the value of the share price multiply. And we think that for all of the reasons that John has cited on the gold price, which we share in terms of our long-term view, that will just give us even more tailwinds. We don't see any headwinds. We only see tailwinds. And we really do believe that the best play in the gold development space is being able to own the largest gold mine in the United States. It's that simple. It's a very, very straightforward story, and it explains the confidence that John has had and I've had for 16 or 17 years. We really do believe that this is our time and that 100% ownership is exactly what the market needs to see.
Right. And you're talking about kind of building equity value there. The shares are up 12% right now as you lay out the case for what's happening. John, I'm curious. You know, we saw it was gold earlier this year, pre-silver. It was, we would talk about palladium and platinum, and am I forgetting something? Nickel, copper, obviously. So my question to you, John, is this just a gold story for you on a macro level? Is it more broad? And could the new Fed chair, Kevin Warsh, actually be the person who represents the biggest threat to that investment thesis in some ways?
I don't think so. I think gold, I am uniquely focused on gold. So I always find being an expert in one area is better than knowing a little bit about a lot of different areas. So by being that expert, it's what's driven me to Nova Gold, as you know, perhaps the most valuable single gold asset in the United States, which will be, is the best jurisdiction for gold. I think the reason why gold is rising as an alternative currency is because of the lack of faith in paper currencies. The amount of government debt is increasing. There's been political influence on reserve holdings that, you know, most central banks and many individuals now feel safer having their long-term assets invested in gold as a currency rather than paper currencies. And that demand, I think, will continue to grow and that will have a positive impact on the gold price.
Is there anything that people could do? I mean, and again, you look at the situation in Japan, where whether it's Japan or sovereign Europe, you have kind of governments needing to just buy a lot of that longer-term debt to keep yields down. We hope that doesn't, you know, become that extreme here, John. But do you think that politicians can change course so that we don't have, you know, I know that the deficit this year just surpassed where we were a year ago? It's a tough problem, but at some point, when we read the headlines, social security, they're going to have to make cuts there. I mean, at some point, are we going to be able to figure this out? Will that headline risk then be what potentially brings a halt to the rise in gold?
