Bring water or chicken broth to a boil in a medium saucepan.
- Gradually whisk in the grits, reduce heat to low, and cook, stirring frequently, until thick and creamy, about 20-25 minutes.
- Remove from heat and stir in the smoked Gouda cheese and butter until melted and smooth.
- Season with salt and pepper to taste.
- Serve the grits warm as a hearty complement to steak.