Some marquee funds have piled into gold as a hedge against a devalued dollar, though skeptics say the trade is overhyped
By Josh Friedlander
Raise your hand if you'd lend money to the U.S. government. Out in front of the class, Paulson & Co. founder John Paulson isn't stirring. His hands are buried deep in his pockets, and his pockets are filled with gold.
"John has lost faith in the U.S. dollar as a currency," said T. Michael Johnson, head of investor relations at Paulson's $26 billion hedge fund, speaking in late April at the EuroHedge Summit in Paris. "He believes that gold will become the reserve currency of the world."
Gold has climbed from a 30-year low of $253 an ounce in 1999 to $952 on May 26. The metal reached nominal highs of more than $1,000 in both March 2008 and February 2009. If the rush to...