Hedge fund star John Paulson rushes into gold, but investors should be wary


The euphoria bubbling around gold may have gotten another big boost -- not that it needed one.

Hedge fund manager John Paulson is raising a new fund that will focus on gold and related items like miners and derivatives. The move by Paulson -- who made a fortune betting against real estate -- is seen as another vote of confidence for gold prices already near all-time highs.

But investors should avoid getting star struck and take a careful look at the volatile gold market. For starters, the mania surrounding gold now shows many of the telltale signs of a bubble. And while a skilled trader like Paulson might know how to ride and when to bail on the momentum, other investors could get caught by a sudden unwinding.