Debt, Currency Debasement, and Why Gold Still Wins in 2026 | David Garofalo

Key Concepts

• Quantitative Easing (QE): Expansion of the money supply by central banks, often used to stimulate economic growth.
• Fiat Currency: Government-issued currency that is not backed by a physical commodity like gold.
• Royalty & Streaming Companies: Companies that provide upfront capital to mining projects in exchange for a percentage of future production (royalties) or a fixed amount of metal (streams).
• All-In Sustaining Cost (AISC): The total cost of producing an ounce of gold, including operating costs, capital expenditures, and exploration costs.
• EBITDOM: Earnings Before Interest, Taxes, Depreciation, and Amortization of Mining Operations – a key profitability metric in the mining industry.
• Debt-Free: Having no outstanding debt obligations.
• Free Cash Flow: Cash flow available to the company after all expenses and investments have been paid.
• Opportunity Cost: The potential benefit that is missed when choosing one alternative over another.
• Remonetization of Gold: The increasing trend of investors allocating capital to gold as a store of value.

Precious Metals Surge & Royalty Company Strategies in 2026

Introduction

The interview with David Guffalo, Chair, President, and CEO of Gold Royalty, discusses the significant price increases in precious metals (gold, silver, and copper) at the end of 2025 and the outlook for 2026. The conversation also delves into the dynamics of the royalty and streaming sector, particularly the increasing consolidation and the role of companies like Tether.

1. The Bullish Trend in Precious Metals

At the start of 2026, gold is approaching $4,500 per ounce, silver has surpassed $80 per ounce, and copper is at $13,000 per ton ($6 per pound). These price increases are not a sudden phenomenon but a long-term trend. In 2025 alone, gold prices rose by 70%, and silver by 170%. David Guffalo attributes this surge to the long-term effects of quantitative easing (QE) and the delinking of fiat currencies from the gold standard in the early 1970s. He highlights a striking correlation between the decline in purchasing power of fiat currencies and the increase in gold prices – a roughly linear relationship over the past 50 years, with the dollar’s purchasing power decreasing by approximately 99% while gold has risen from $35 to $4,500 per ounce.

2. 2026 Price Expectations & Macroeconomic Drivers

Analyst forecasts for gold in 2026 range from $7,000 to $8,000 per ounce. Guffalo believes gold can only continue to rise given the continued decline in fiat currencies and historically unprecedented global debt levels. He argues that governments have no fiscally responsible way to repay this debt and will therefore continue to debase their currencies, driving up the price of gold. Global debt-to-GDP has increased 3.5-fold, from 100% to 350%. While geopolitical turmoil can have short-term impacts, the underlying economic factors are the primary drivers.

3. Geopolitical Influences & Shift to Hard Assets

Geopolitical events, such as the US involvement with Venezuela and the potential for peace in Ukraine, can influence metal prices. However, Guffalo emphasizes a broader trend: a reorientation of monetary instruments into hard assets like gold, away from fiat currencies. He believes these events are accelerating this remonetization process.

4. The Changing Opportunity Cost of Holding Gold

Historically, high interest rates and low inflation incentivized investment in sovereign debt. However, Guffalo argues that inflation is now higher than reported, resulting in negative real yields on most sovereign debt. This eliminates the opportunity cost of holding gold, which cannot be debased. He anticipates that further interest rate cuts, as advocated by President Trump, will further reduce the opportunity cost of holding gold. The need to keep interest rates low to service massive debt burdens reinforces this dynamic.

5. Consolidation in the Royalty & Streaming Sector

The royalty and streaming space experienced increased consolidation in 2025, with the entry of Tether, a stablecoin company, as an investor. Gold Royalty itself has been actively involved in consolidation, merging with three companies since its IPO in March 2021. Guffalo explains that scale is crucial in this industry, as it lowers the cost of capital. Larger companies secure better financing terms and can compete for larger, more lucrative royalties and streams. Tether’s investment in Gold Royalty and other companies (Elemental, Metalla) reflects this belief in the benefits of scale. A combined entity of Tether’s investments would create a $3.5 billion company, ranking sixth in the industry.

6. Gold Royalty’s Strategy & Growth Pipeline

Gold Royalty’s share price increased by 250% in 2025. Guffalo’s strategy focuses on crystallizing the growth already embedded in its portfolio. The company has grown its portfolio from 18 royalties in 2021 to over 250, with a transition from having no cash-flowing royalties to eight currently, and a projected 20 by the end of the decade. They anticipate a 360% increase in gold equivalent ounce attributable production over the next five years, reaching approximately 4,000 gold equivalent ounces and $120 million in revenue with a 90%+ margin. Crucially, all royalties are fully paid for, eliminating future capital calls. The company’s $103 million raise in 2025 was used to acquire the Pedra Banker royalty.

7. Shareholder Returns & Mining Company Profitability

Most gold producers are now enjoying all-in sustaining cost (AISC) margins exceeding the gold price from a year ago. Royalty companies, with margins exceeding 90%, are also positioned to increase shareholder returns. Guffalo anticipates that mining companies will begin to yield returns approaching 10% as free cash flow increases. He notes that while AISC has been stable due to factors like lower oil prices and relatively stable labor costs, a future adjustment in mine plans – processing lower-grade ore – may lead to a slight increase in unit costs, extending mine lives. Historically, EBITDOM margins have remained stable at around 30%.

8. Pipeline & Deal Flow in a Changing Financing Landscape

While the short-term focus is on harvesting existing growth, Guffalo acknowledges that the pipeline for new deals may temporarily dry up as producers have less need for financing due to higher metal prices. However, the opening of equity capital markets to exploration and development companies is a positive development, leading to increased exploration activity and potential future opportunities. Gold Royalty has over $120 million in available liquidity and is actively seeking new investment opportunities.

9. CEO Rotation in the Gold Sector

The recent changes in leadership at major gold companies (Barrick, Newmont) are not necessarily linked to the rising metal prices but rather represent a natural cycle of succession. Guffalo believes a new generation is entering the sector, which is a healthy development.

10. Outlook for 2026 & Key Concerns

Gold Royalty expects a significant increase in revenue in 2026, driven by projects like Pedra Banker, Cotay, Canadian Malartic, Borbar, and the Ren underground extension. Guffalo’s primary concern is finding new deals to deploy the company’s capital and continue generating returns for shareholders.

Notable Quote:

“Gold doesn't have an opportunity cost to being held right now. Historically, we've had high interest rates, we've had low inflation and that's really driven a lot of capital into sovereign debt which yielded positively in the past. That's not the case anymore.” – David Guffalo.