(Kitco News) David Garofalo, CEO and Chairman of Gold Royalty (NYSE American: GROY), says gold’s strength reflects deep structural pressures in the global financial system rather than short-term speculation, as rising debt levels, currency debasement, and negative real interest rates continue to reshape capital flows.
Speaking with Kitco Mining, Garofalo said gold’s long-term rise mirrors the decline in fiat currency purchasing power since the global economy moved away from the gold standard. “Gold is the one monetary instrument that can't be debased,” he said, arguing that gold’s role as a monetary asset has become more pronounced since the global financial crisis.
Garofalo pointed to record global debt as the core driver behind that trend. “There really is no fiscally responsible way for these governments to repay debt,” he said. As a result, he added, “the only way to really deal with the debt is to debase the underlying fiat currency and really devalue the debt.” In that environment, he said, gold continues to benefit as purchasing power erodes.
He also argued that gold now faces little opportunity cost relative to traditional financial assets. “Gold really doesn't have an opportunity cost to being held right now,” Garofalo said. He noted that inflation-adjusted returns across developed-world bond markets remain negative, and that the reality is most sovereign debt, particularly in the Western world, is “yielding negative on a real basis.”
Garofalo said the scale of government, corporate, and household debt also limits policymakers’ ability to keep interest rates elevated, reinforcing capital flows away from fixed income and toward hard assets. While geopolitical developments can influence markets in the short term, he said they are not the primary force behind gold’s longer-term direction. “Obviously, the political turmoil has a short-term impact on the gold price,” Garofalo said, adding that “the underlying economics I just described is really what's driving the gold price upwards.”
Turning to the royalty and streaming sector, Garofalo said the industry is increasingly shaped by consolidation and scale. “Scale does matter in our industry,” he said, describing royalties as a cost-of-capital business. “This is a cost-of-capital-driven business,” Garofalo added, noting that size directly affects competitiveness and access to capital.
Since its March 2021 IPO, Gold Royalty has expanded its portfolio from 18 royalties to more than 250. Garofalo said the company has now moved beyond its buildout phase and into a period of cash flow generation. “All of our royalties are completely bought and paid for,” he said. “We have no capital calls. We have no installment payments.”
Garofalo said the company generated its first full year of free cash flow in 2025 and is now debt-free, positioning it to benefit directly from higher production and metal prices. Looking ahead, he outlined a growth profile he believes differentiates Gold Royalty within the sector. “Our gold equivalent ounce attributable production will be growing by about 360% over that same five-year horizon,” he said.
He added that the royalty model’s margin structure supports rising returns over time. “We’re really in a position now to harvest massive returns,” Garofalo said, pointing to high margins and leverage to both gold prices and exploration success at partner operations.
Garofalo addressed the growing presence of new investors in the royalty space, including stablecoin issuer Tether, which has taken minority positions across several royalty companies. He said those investments reflect a broader recognition of consolidation trends and the importance of scale, adding that the sector still lacks a mid-cap royalty company large enough to attract major institutional investors while retaining meaningful growth potential.
Despite higher metal prices and improved capital market conditions, Garofalo said discipline remains essential. “Unfortunately, it’s a competitive environment,” he said, noting that pricing and return thresholds continue to guide the company’s approach to new deals.
Looking ahead to 2026, Garofalo said Gold Royalty expects a step change in revenue as additional assets contribute for a full year and production ramps up across the portfolio. He added that while deal flow remains a focus, the company’s priority is deploying capital in a way that compounds long-term shareholder returns.
Watch the full interview on the Kitco Mining YouTube channel for Garofalo’s detailed views on gold, debt, royalty consolidation, cash flow growth, and the evolving structure of the precious metals market.