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Gold peaked in 1981 when it reached $850 an ounce in nominal terms, but adjusted for inflation, that would equal $3,000 in real terms today.
$3,000 is this cycle’s coming peak, David Garofalo, CEO of Gold Royalty Corp. told David Lin, anchor for Kitco News.
“Gold’s all-time peak in real terms was actually achieved in 1981 when the nominal gold price was $850 an ounce, that would be $3,000 an ounce in 2021 dollars. That’s what I think I see in this cycle. The reason you want to be in the royalty companies in that kind of pronounced price [movement] versus the producers is we protect you from cost inflation,” he said.
Royalty companies, like Gold Royalty, earn income by taking a percentage of their portfolio miner companies’ top line revenue, and so are not exposed to potential margin shrinkages by means of cost inflation.
Prior to Gold Royalty, Garofalo served as the CEO of Goldcorp before the merger with Newmont.
On cryptocurrencies, Garofalo said that the scarcity aspect is not a valid argument for categorizing cryptos as a store of value.
“It’s inevitable that the central banks will continue to repatriate their control over currencies and I will say that it just becomes a fiat currency like everything else. You’re going to see a lot of air coming out of that market. Scarcity is an illusion,” he said.
For information on Gold Royalty’s recent three-way merger with Abitibi Royalties and Golden Valley Mines and Royalties, watch the video above. Follow David Lin on Twitter: @davidlin_TV (https://twitter.com/davidlin_TV).
By David Lin
For Kitco News
