In a wonderful book “The Greatest Trade Ever”, the author, Gregory Zuckerman, writes on John Paulson’s gold bet.

“John Paulson profited from one of the biggest financial bubbles in history. But another bubble inevitably awaits. Veteran investor Jeremy Grantham has identified twenty-eight bubbles in various global markets since 1920; the past decade alone has witnessed historic bubbles in Asian currencies, Internet stocks, real estate, and commodity prices, as if markets are becoming less efficient, not more so. Ever more furious competition among investors, and the growing ease with which they quickly can shift cash to almost any kind of market around the globe, may be partly responsible for the change.

Extremely low interest rates, a key ingredient in past bubbles, have the potential to inflate the next one. The appetite to lend likely has been sated for a while, but it won't be long before bankers convince themselves of the next easy way to score sure profits. Perhaps massive increases in public-sector borrowing, which likely will prove harder to reduce than it was to expand, will sow the seeds of the next financial bubble. Growth stemming from bank credit and government deficits seems more unstable than an expansion driven by innovation and rising productivity.

George Soros and others have encouraged regulators to step in to tame budding asset expansions. But it seems unlikely that any group of bankers, academics, or bureaucrats will be any better at predicting, or even identifying, future bubbles in time to help curtail them.

That so much trading today involves complex financial products in markets with little transparency makes it more challenging for professional investors, let alone individuals, who likely will find it hard to track arcane and yet crucial instruments such as distressed debt, credit-default swaps, and other derivatives that the top traders increasingly focus on.

And yet, just as John Paulson and the group of investors who discovered how to profit from the housing collapse were largely outsiders to the mortgage and real estate game, amateurs may have the best opportunity to identify and profit from future bubbles. Financial pros increasingly form their views by watching the same business-television broadcasts and reading the same articles, creating an opening for those on the outside willing to challenge the conventional wisdom.

It may be no coincidence that the housing bubble burst around the time that products emerged to allow bearish renegades like John Paulson and others to bet against the real estate market. It would suggest that dissidents who dare to raise questions and wager against markets should be encouraged, rather than scorned.

By early 2009, John Paulson itched to start buying investments again. He was never very comfortable as a short seller. Making money was his passion, not sticking with any particular dogma. As Paulson pored over the balance sheets of the financial companies that he had spent more than three years betting against, he concluded that they had fallen too far in price. Paulson ordered his traders to begin purchasing the debt of troubled companies, securities backed by home and commercial mortgages, shares of banks, and other investments.

It was a slow accumulation and well below the radar screen, but by August he owned a huge cache of about $20 billion of these investments, convinced that the economy had regained its footing. The step earned his firm about $3 billion in the first half of the year as financial markets began to show some life.

As Paulson sat in Andrew Hoine's nearby office one day, discussing how much was being spent by the United States and other nations to rescue areas of the economy crippled by the financial collapse, Paulson discovered his next target, one he was certain was as doomed to collapse as subprime mortgages once had been: the U.S. dollar.

Paulson made a simple calculation: The supply of dollars had expanded by 120 percent over several months. That surely would lead to a drop in its value, and an eventual surge in inflation.

"With all this spending, we're going to have massive inflation," Paulson told Hoine, arguing that almost every major currency was at risk, other than the Chinese yuan. "What's the only asset that will hold value? It's got to be gold.”

Paulson never had even dabbled in gold, and had no currency experts on his team. Some of his investors were skeptical of his argument, nothing a burst of inflation was unlikely with unemployment high, wages stagnant, and businesses running at a fraction of their potential capacity. Others said too many other investors already had flocked to gold. Some of Paulson's investors withdrew money from the fund, pushing his assets down to $28 billion or so.

Paulson acknowledged that his was a straightforward argument, but he paid the critics little heed and proceeded to buy more than $1 billion of shares of gold miners, or 12 percent of his largest fund. He also purchased billions of dollars of gold investments to back new classes of his funds denominated by gold and chose these classes for his own money.

Betting against the dollar would be his new trade.

"I couldn't be more confident,” Paulson said in the summer of 2009.

"Three or four years from now people will ask why they didn't buy gold earlier. Over time our currency will lose value and inflation will rise - that's our future."

His passion for yet another big trade was hard to mask.

"It's like Wimbledon,” he says. "When you win one year, you don't quit; you want to win again.””