VIDEO — David Garofalo: Gold Price Rise Inevitable, Expect US$3,000 Sooner Than Later

David Garofalo: Gold Price Rise Inevitable, Expect US$3,000 Sooner Than Lateryoutu.be

Gold put on a fairly flat performance in 2021, but David Garofalo, formerly of Goldcorp and now at the helm of Gold Royalty (NYSEAMERICAN:GROY), expects a major move from the metal in 2022.

"I see no reason why we wouldn't achieve that US$3,000 an ounce target," he told the Investing News Network in a recent interview. "When it happens, it's going to happen quickly and violently, as it normally does in commodity cycles. It's not a steady upward trajectory to those types of targets."

He believes the trigger for such an increase will be "a correction in the general equity markets," although there are other factors at play that he also thinks will provide tailwinds for the yellow metal.

Garofalo spoke about the threat of inflation, saying that headline inflation numbers drastically understate the real level of inflation — "it's certainly not 5, 6 percent as the headline numbers would indicate," he said, noting that people are currently experiencing double-digit inflation in their day-to-day lives.

"That's because of all the excess paper that's been introduced into the system. Gold is the one currency you can't print — it's very finite in quantity, (and) it's inevitable that gold will go up," he continued.

"I would argue that it hasn't gone up appreciably because cryptocurrencies have displaced it somewhat, particularly with the new generation of investors that have come into the space."

Garofalo believes that ultimately market participants will realize that gold is superior to cryptocurrencies, and that will spark a migration into gold. "The (cryptocurrency valuations) make no sense — investors are buying it with the expectation that it's a reserve currency, it's going to protect them against volatility in the general equity markets, but that is not a safeguard of assets when you have volatility of 40 to 50 percent in a day," he said.

In his opinion, royalty companies are the best way for investors to play gold since they provide leverage to the yellow metal's price, as well as insulation from the problems miners face, which now includes input cost inflation.

"I do believe gold is going to do exceedingly well as it did 10 years ago, when there was a lot of monetary stimulus introduced into the system," he said. "But again, because of the input cost inflation that we're already seeing in the mining space, I think you're going to see the royalty companies significantly outperform at this end of the cycle."

Watch the interview above for more from Garofalo on where gold is headed in 2022.

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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.