Peter Schiff: Fed Easing Will Push Gold to $5,000

Gold has climbed 8 percent so far this year, and the party is just getting started, says Peter Schiff, CEO of Euro Pacific Capital.

The Federal Reserve will ultimately reverse the tapering of its quantitative easing (QE), which will send gold soaring, ultimately reaching $5,000 an ounce, he predicts.

"I believe the consensus expectation that the U.S. recovery is real and that the Fed will end its [QE] program and normalize interest rates is wrong," Schiff tells MarketWatch.

"When the Fed has to admit that its forecast of a sustained recovery is wrong, it will come to the aid of a faltering economy with even more QE. When that happens, gold will rally."

Other factors that will boost the precious metal are a weaker dollar and rising commodity prices, including oil, Schiff proclaims.

"Also, any major geopolitical concerns, particularly if there is a deterioration of the situation in Ukraine, will add to gold's appeal. I also expect renewed physical demand from emerging markets like India and China," he notes.

"Most likely prices have bottomed, as too many speculators are looking for lower prices," he adds. "The fundamental case for gold has also never been stronger. From a gold short seller's perspective, this will prove to be the equivalent of a perfect storm. Their losses will be severe."

Spot gold was at $1,303.10 an ounce early Monday, little changed from $1,302.84 late on Friday, while U.S. gold futures for June delivery were up 70 cents an ounce at $1,301.50.

Gold prices are expected to rise this week as investors seek haven investments amid the crisis in Ukraine.

"Gold went 'bid' as soon as there was violence and death,” Frank Lesh, broker and futures analyst with FuturePath Trading told the International Business Times. “A diplomatic and political standoff is enough to support gold, but it takes guns going off to propel it higher."