rewrite this title John Paulson says we are in the early stages of a long-term bull market for gold

John Paulson, the hedge fund manager who made billions betting against the U.S. housing market before turning bullish on gold, said he believes the precious metal is only in the early stages of a long-term rally.

“I do think we’re in the beginnings or the early stages of a long-term bull market for gold,” Paulson said on CNBC’s “The Exchange” Wednesday. “As people lose faith in paper currencies, gold as an alternative will continue to grow.”

Paulson, whose wager against subprime mortgages became one of the most profitable trades in Wall Street history, shifted his focus to gold in 2009, arguing that the unprecedented fiscal and monetary stimulus following the financial crisis would ultimately weaken the U.S. dollar. Since then, gold prices have roughly quadrupled, topping the $5,000 threshold before pulling back.

The billionaire investor said demand for bullion continues to broaden, led by central banks that have been adding to their reserves alongside growing private-sector interest.

“Gold is becoming the most apt reserve currency in the world, replacing fiat currencies,” Paulson said. “The demand from central banks, for instance, has continued to grow, as has the private sector.”

Paulson also argued that investors stand to benefit more from owning gold miners than bullion itself, particularly companies with large undeveloped reserves.

“I think the greatest way to invest is to invest in early-stage gold stocks,” he said.

Paulson made the comments as NovaGold Resources announced it would acquire Paulson Advisers’ 40% stake in the Donlin Gold project in Alaska. Paulson, who serves as co-chairman of NovaGold, said the company offers investors leveraged exposure to rising gold prices because of its sizable resource base.

“NovaGold has 40 million ounces of gold indicated and measured resources and reserves at the market [capitalization] of $4.2 billion,” Paulson said. “I think the best way to play gold is through stocks like NovaGold, if not NovaGold itself.”