Yahoo Finance Gold Royalty Corp. (AMEX:GROY) Q4 2023 Earnings Call Transcript
Gold Royalty Corp. (AMEX:GROY) Q4 2023 Earnings Call Transcript March 28, 2024
Gold Royalty Corp. isn't one of the 30 most popular stocks among hedge funds at the end of the third quarter (see the details here).
Joanne Jobin: Good morning. I'm Joanne Jobin, your VID Media host. Welcome to the Gold Royalty Quarterly Town Hall Forum. Before we commence just a reminder that if you do have any questions for the company, please place them into the Q&A tab located at the top of this screen. After the presentation, I will be delighted to moderate submitted questions from our audience. With us this morning is the Gold Royalty team, led by Chairman and CEO, David Garofalo, who will make the intros to the team and take you through the highlights of the most recent quarterly results. David, the stage is yours.
David Garofalo: Thank you, Joanne, and good morning, everybody. We're delighted you could join us to talk about our fourth quarter results. I'm joined today by our Chief Financial Officer, Andrew Gubbels; and our Director of Investor Relations and Corporate Development, Peter Behncke. And I'll pass it on to them shortly. But I thought what I would do to start today is talk a little bit about the gold price environment that we find ourselves in, and I think it's been an auspicious start to the year. Many of the themes that we were talking about over the course of 2023 and even before that have really come to pass in terms of a rising gold price in the face of falling real interest rates. Inflation is still quite deeply entrenched.
The headline numbers really understate the reality on the ground. We're not experiencing 3% or 4% inflation fact, if you look at our day to day expenses, whether it's food, fuel, or shelter, and as we see interest rates reset on mortgages, we're seeing 15% to 20% inflation on the ground. And gold is a very accurate barometer of the inflation we're experiencing and where real interest rates lie. Yes, interest rates have stabilized on a normal basis. They have gone up significantly in the last couple of years as the Federal Reserve and other central banks have tightened monetary policy, but the reality is inflation's continued to accelerate. So that's driven real interest rates down deeper and deeper into negative territory. What gold is telling you is the purchasing power of your fiat currencies is steadily being deteriorated through inflation.
You're losing your savings through inflation. Gold is the ultimate protector of your capital because it's the one currency can't be printed and it's telling us that inflation is still undermining the value of our paper currencies, and we'll continue to do so. The Federal Reserve is starting to pivot, or at least signaling that they will, and going to be cutting nominal rates, and I would argue that's actually quite premature. It's not going to be as a result of inflation coming down. It's because of the onerous debt levels that we've stopped on globally, at the government level, corporate level, and individually at 350% to debt to GDP, interest rates right now, nominal rates make debt unserviceable. There's no fiscally responsible way for these governments to repay the debt.
So the central banks are pivoting away from higher interest rates in order to preserve corporate and government balance sheets, not because inflation is slain. That's why we think gold will continue to accelerate. And it's nowhere near the all time highs for gold on a real basis, because you look at the last big inflation cycle we had in the 1970s, gold actually peaked close to $3,000 an ounce on a real basis [indiscernible]. So well away from where the all time high for gold is. And I would argue that we're going to experience much higher gold prices than we experienced in the last big inflation cycle because, as I said, the central banks are cutting interest rates prematurely before inflation has actually been tamed and that will result in unprecedented levels for the gold price.
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