Legendary hedge fund manager John Paulson remains undaunted by the huge plunge in gold, maintaining that the case for owning the yellow metal remains strong.
Perhaps no name has been as synonymous with gold's woes as Paulson, who made his reputation by shorting subprime mortgages prior to the financial crisis unfolding in 2008 and 2009.
Since then, his star has dimmed as a big play he made in gold has gone sour. An expected surge in inflation still hasn't happened, and many investors have bailed as the price has fallen.
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Speaking at the Delivering Alpha conference presented by CNBC and Institutional Investor, Paulson said betting that the Federal Reserve's quantitative easing programs would spike inflation hasn't paid off—yet.
"Although the Fed has printed a lot of money to date, there's very little inflation. People who bought gold in anticipation of inflation have lost their patience," he said during a lunchtime question-and-answer session. "I would say that the rationale for owning gold has not gone away. The consequence of printing money over time will be inflation, it's just difficult to predict when."
Despite the big headlines about Paulson's gold losses, he said overall his fund has performed very well this year.
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A good part of the reason for that is his change of heart when it comes to housing.
Paulson said the housing recovery is real, and where he was winning money betting on foreclosures and defaults, he is now making it on a steady run higher in housing prices and sales.
"The housing market has bottomed," he said. "It's not too late to get involved. I still think buying a home is the best investment any individual can make. Affordability is still at an all-time high."
Paulson said he feels as strongly about the housing recovery as he did its demise.
Elsewhere, he said the climate for mergers and acquisitions also remain strong, with acquirers getting benefit to their stock prices as well.
—By CNBC's Jeff Cox. Follow him on Twitter @JeffCoxCNBCcom.