John Paulson, king of the subprime short, has become a goldbug. His metamorphosis can be traced to the first quarter of this year, when the New York–based hedge fund manager moved roughly 44 percent of the $9 billion in U.S. equities he had held in Paulson & Co. into exchange-traded funds specializing in gold-mining stocks and related companies. This included $2.8 billion for an initial stake in SPDR Gold Trust. Not only was that his largest equity...