Billionaire investor and hedge fund veteran John Paulson said on Friday he would like to see the Federal Reserve start with a rate cut. The Federal Reserve is expected to lower its benchmark interest rate on Wednesday, but traders are divided on the extent of the cut. Central bank chiefs appear to be deciding whether to cut interest rates by 25 basis points or 50 basis points. One basis point is equal to 0.01 percentage point. Paulson said on CNBC’s “Money Movers” on Friday that he believed a 50 basis point cut would be more appropriate. “I think the Fed is a little behind the curve… I think they’ve seen enough data to start lowering rates, and I would suggest it would be better to cut rates more aggressively,” he said. One asset class that often rises when the Fed cuts interest rates is gold, and Paulson is bullish on gold in the long term. He said one of the reasons gold is trading near all-time highs is interest from foreign governments. “I think the main reason for the rise in gold prices is the global (trend) … less confidence in paper currency, especially central banks,” Paulson said, adding that a 10% allocation to gold would be a good bet for investors. said it might be “prudent” but made clear he was not making explicit recommendations. Paulson said his portfolio is invested in both stocks and gold-related derivatives. His family office Paulson & Co. holds stakes in several gold mining stocks, including Agnico Eagle Mines, according to VerityData. Paulson, a campaign donor to Donald Trump, has warned that the stock market will “crash” if some of Vice President Kamala Harris’s campaign tax proposals are implemented. He also said he is concerned about the federal government’s debt, but is not shorting U.S. Treasuries at this time. Paulson is a veteran of the hedge fund world, perhaps best known for betting against the housing market before the 2007 crash. Paulson announced in 2020 that he would convert the hedge fund into a family office.
