Key Points
Gold Royalty reported fourth quarter earnings that slightly missed revenue expectations.
However, today's big decline was likely due to a significant pullback in the price of gold.
Gold's reputation as an inflation hedge doesn't seem to be working today.
Shares of Gold Royalty Corporation(NYSEMKT: GROY) fell 9.1% on Thursday as of 2:00 p.m. EDT.
While Gold Royalty reported earnings last night, this was likely a secondary factor in the stock's fall today, if at all. The entire gold sector was down on Thursday, with gold prices down nearly 6% at that time.
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Ironically, inflationary fears may be pushing gold prices down today. While inflation would normally mean each ounce of gold is worth more dollars, the past year's price spike and fears over the Federal Reserve's potential reaction to inflation are sending prices down today.
Gold Royalty shows growth 2025
Gold Royalty is a relatively new royalties and streaming company that invests in other companies' projects in exchange for a percentage of a project's gold output, rather than earning cash interest. As such, the company is levered to the price of gold but in many ways lower-risk than mining companies, which bear the costs and risks of building and operating physical mines. Gold Royalty was incorporated in 2020 and went public in 2021.
Last night, Gold Royalty reported fourth quarter 2025 earnings, with revenue up 33.5% to $4.5 million, slightly missing expectations, while adjusted (non-GAAP) earnings per share of $0.00 came in line with expectations.
Still, the results likely played a lesser role in today's price action, as most gold mining and streaming stocks were down across the board. The conflict in Iran, and in particular the blocking of the Strait of Hormuz, is pushing up oil and gas prices and, by extension, inflation expectations.
Yesterday's Federal Reserve decision to hold interest rates steady, along with commentary from Fed Chair Jay Powell, wasn't encouraging the market on the longer-term inflation front either. Long-term Treasury Bond rates rose a bit today, suggesting investors may expect fewer interest rate cuts this year than previously expected.
Image source: Getty Images.
Isn't gold supposed to be an inflation hedge?
The price action may be confusing, as gold is often thought of as a hedge against inflation. However, if the Federal Reserve increases interest rates and monetary conditions tighten in order to contain inflation, that could lead to an economic downturn or recession.
Since gold is an illiquid asset, investors may demand less of it if interest rates rise. And since gold had already rallied some 65% in 2025, its price may already reflect some of the geopolitical risks we are seeing today.
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Billy Duberstein and/or his clients have no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.
