In a saucepan, bring water, milk, and salt to a boil.
Slowly stir in the grits and reduce heat to low. Cook, stirring frequently, until thickened, about 5-7 minutes.
Remove from heat and stir in the butter, smoked Gouda, and cheddar cheese until melted and smooth.
In a mixing bowl, temper the beaten eggs by slowly adding a small amount of the hot grits mixture to the eggs, stirring constantly. Then, add the egg mixture back into the saucepan with the remaining grits, stirring well.
Pour the mixture into a greased baking dish and bake for 30-35 minutes, or until set and golden on top.
Let cool slightly before serving. Enjoy!
Notes:
This casserole can be made ahead and reheated. Perfect for a cozy breakfast or a comforting side dish.