Why Gold May Be Headed for $5000

Despite a ho-hum performance year to date for gold, Peter Schiff, chief executive officer at Euro Pacific Capital, is still betting on gold’s eventual climb to $5,000 an ounce.

Schiff’s persistent call is more than 300% higher than the Thursday’s settlement at $1,225.20 an ounce on Comex, which marked the highest close for the yellow metal since mid-February.

Gold is roughly 3% higher year to date, but the precious metal seems light year’s away from the all-time highs near $1,900 reached in 2011.

Still, gold’s performance hasn’t been particularly exciting in recent months. Prices GCM5, -0.62% tallied declines for the last three months in a row. They logged declines last year and the year prior.

Gold’s sluggishness makes Schiff’s dogged call on gold all the more notable.

Over the years, he’s reiterated his long-running gold-price forecast, which has yet to come to fruition. Lately, however, he’s sounding even more bullish.

“There really is no limit to how high gold prices can rise,” he told MarketWatch in a phone interview recently.

Hemming in gold and supporting the dollar DXY, +0.48% is the “false perception” that the Federal Reserve will raise interest rates, claims Schiff, who is known for his criticism of the U.S. central bank.

U.S. economic data has been “awful” and despite that, the Fed hasn’t changed its stance, he said. “We got a lot of weak economic data in the first quarter” and it’s going to be a “very weak” second quarter.

The nation’s economic growth slowed to a crawl in the first quarter, with gross domestic product expanding by a meager 0.2% annual pace.

The Fed is still “posturing” as if it’ll soon raise interest rates, but it won’t, Schiff predicts.

“We’ll always have to do [quantitative easing] to offset the damage from the previous QE,” said Schiff, who argued that the Fed has made “mistakes” and has done a “horrible job” with monetary policy.

Market Watch

Craig Erlam
Based in London, England, Craig Erlam joined OANDA in 2015 as a Market Analyst. With more than five years' experience as a financial market analyst and trader, he focuses on both fundamental and technical analysis while conducting macroeconomic commentary. He has been published by The Financial Times, Reuters, the BBC and The Telegraph, and he also appears regularly as a guest commentator on Bloomberg TV, CNBC, FOX Business and BNN. Craig holds a full membership to the Society of Technical Analysts and he is recognized as a Certified Financial Technician by the International Federation of Technical Analysts.