"Gold has really done its job as a store of value," said David Garofalo of Gold Royalty. "But it's likely to accelerate upwards dramatically as inflation accelerates."
David Garofalo: Gold Due for Dramatic Move as Unprecedented Inflation Loomsyoutu.be
After falling briefly below the US$1,700 per ounce level in July, gold has picked back up.
David Garofalo, president and CEO of Gold Royalty (NYSEAMERICAN:GROY), remains confident in the metal's future. He's previously put forward a US$3,000 price point for 2022, and recently reiterated his positive outlook.
"Gold's retained value in the face of a very severe bear market that we've experienced this year, with equities down 10 to 20 percent depending on what major market you're looking at," he said at the Rule Symposium.
"Gold has really done its job as a store of value," Garofalo continued. "But it's likely to accelerate upwards dramatically as inflation accelerates, because the reality is that nominal rates have very limited scope for increases, and (in my view) inflation will continue to accelerate for the foreseeable future."
In his opinion, the fundamentals behind gold are as strong as ever, and the precious metal's performance in the inflationary cycle seen during the late 1970s and early 1980s will inform how it moves in the near future.
"It took a couple of years for gold to really gain traction back in the late 1970s, early '80s, before it achieved its all-time real peak of what today would be close to US$3,000 an ounce," Garofalo explained.
What's different this time around is how high inflation is likely to go.
"I think the level of inflation will actually be unprecedented in this cycle, because the amount of debt that's been strapped on globally by governments, by consumers, by corporations is unprecedented on a per capita basis," he said. "There's very limited scope for central banks globally to really raise interest rates on a real basis."
Watch the interview above for more from Garofalo, and click here for the full Rule Symposium playlist on YouTube.
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Securities Disclosure: I, Charlotte McLeod, hold no direct investment interest in any company mentioned in this article.
Editorial Disclosure: The Investing News Network does not guarantee the accuracy or thoroughness of the information reported in the interviews it conducts. The opinions expressed in these interviews do not reflect the opinions of the Investing News Network and do not constitute investment advice. All readers are encouraged to perform their own due diligence.
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