Stanley Druckenmiller was born in Pittsburgh, Pennsylvania. He grew up in a middle-class household in the suburbs of Philadelphia. His parents divorced when he was in elementary school and he went to live with his father in NJ. Druckenmiller is a graduate of Collegiate School, Richmond, Virginia. In 1975, he received a BA in English and economics from Bowdoin College (where he opened a hot dog stand with Lawrence B. Lindsey, who later became economic policy adviser to President George W. Bush). He dropped out of a three-year Ph.D. program in economics at the University of Michigan in the middle of the second semester to accept a position as an oil analyst for Pittsburgh National Bank.
In 1988, he was hired by George Soros to replace Victor Niederhoffer at Quantum Fund. He and Soros famously "broke the Bank of England" when they shorted British pound sterling in 1992, reputedly making more than $1 billion in profits. They calculated that the Bank of England did not have enough foreign currency reserves with which to buy enough sterling to prop up the currency and that raising interest rates would be politically unsustainable. He left Soros in 2000 after taking large losses in technology stocks. Since then, he has concentrated full-time on his fund Duquesne Capital. He is profiled in the book The New Market Wizards by Jack D. Schwager. On August 18, 2010, Druckenmiller announced the closing of his hedge fund "telling investors he'd been worn down by the stress of trying to maintain one of the best trading records in the industry while managing an enormous amount of capital." Duquesne Capital Management posts an average annual return of 30 percent without any money-losing year. His funds were down for about 5 percent when he announced his retirement in August. However, they had since erased the losses and closed with a small gain through successful bets that the market would rally in anticipation that the Federal Reserve would announce further "Quantitative Easing" to assist in reducing unemployment and avoid deflation.
John Paulson was born in 1955 in Queens, New York. His father was born Alfredo Guillermo Paulsen in Ecuador to a father of half French and half Norwegian descent and an Ecuadorian mother. Alfredo was orphaned at fifteen and at age sixteen moved to Los Angeles with his younger brother Alberto. Alfredo enlisted in the US Army where he served and was wounded in Italy during World War II. He later changed his surname from Paulsen to Paulson. John's mother was the daughter of Jewish immigrants from Lithuania and Romania who had moved to New York City.
Paulson studied in NYU where he began to excel in business studies. In 1978, he graduated valedictorian of his class summa cum laude in finance from New York University's College of Business and Public Administration. He went on to Harvard Business School, on a Sidney J. Weinberg/Goldman Sachs scholarship, earning an MBA as a George F. Baker Scholar (top 5 percent of his class) in 1980.
In 1994, he founded his own hedge fund, Paulson & Co. with $2 million and one employee. By 2003, his fund had grown to $300 million in assets. Paulson and his company specialize in "event-driven" investments—i.e. in mergers, acquisitions, spin-offs, proxy contests, etc.—and he has made hundreds of such investments throughout his career. In 2010, he set another hedge fund record by making nearly $5 billion in a single year betting against American real estate. However, in 2011, he made losing investments in Bank of America, Citigroup and the fraud-suspected China-based Canadian-listed company, Sino-Forest Corporation. His flagship fund, Paulson Advantage Fund, fell sharply in 2011. In 2013 though some of his funds behaved incredibly well.
Why writing about these two billionaires? Only to let you know that 2 great money machines are strongly betting on gold. For example, according to his last report Druckenmiller holds... 30% of his portfolio in gold (through ETF and derivatives).