Gold has continued to perform well this year, surging to nearly $1,950 per ounce at the time of writing. With gold looking to break through the key psychological threshold of $2,000 per ounce and potentially make a new resistance level, investors in precious metals and alternative assets have their eye on how this asset class will perform. Indeed, with inflation continuing to remain rampant, many investors are looking for a store of value that won’t lose its value.

One such investor who has held his faith in the yellow metal is Peter Schiff.

According to the Euro Pacific Capital CEO, the Federal Reserve isn’t likely to continue to tighten but will eventually expand quantitative easing (QE). He suggested the U.S. economy relies on quantitative easing and is heading back into recession, essentially wiping out all the work the Fed has already done.

Let’s discuss why Schiff thinks gold will hit $5,000 per ounce and what other experts have to say.

Schiff Is Always Bullish on Gold

Schiff suggests the Fed will increase easing because the current program won’t result in a soft landing, and the economy is already weaker than is widely thought. That could lead to a significant gold rally as people realize the economy isn’t improving as expected, contrary to the Fed’s goals, as per its hawkish monetary policy stance.

Peter Schiff has suggested the current market sell-off isn’t driven by new triggers but rather by speculative trading activity, with some investors flipping from long to short positions.

The idea emerged that the stock market was outperforming gold, leading to the perception of better opportunities elsewhere. The Fed’s belief that it will win and ultimately be successful in tapering off quantitative easing is one that the Euro Pacific Capital CEO disagrees with. Indeed, Schiff is in a theoretical clash with the Fed’s tapering plans, believing the Fed will be the one to back down, not him. Nonetheless, recent gold price movements suggest Schiff is likely to ultimately win in this battle.

The Trade in Gold Is Misinterpreted

Schiff believes the rationale behind the gold trade is flawed. Gold is selling below production costs due to rising inflation. He predicts mining firms won’t invest until gold reaches $2,500 to $3,000, causing a supply shortage, thus boosting gold prices toward those levels.

According to Schiff, mining is energy-intensive, and a decade ago, oil was $12 to $15 a barrel. Now it’s around $90 per barrel. Additionally, labor costs have risen due to increased living expenses in gold-mining countries. Current gold prices don’t truly cover the all-in-sustaining mining cost for many gold producers outside of a few highly efficient names. Thus, over time, it’s expected that these inflationary pressures should put some natural upward pressure on the price of gold. Those miners who can’t improve their efficiency will fold, leading to a supply shortage and higher gold prices.

Schiff disagrees with the market’s view on the economy and believes the U.S. is heading toward a recession. Gold prices are likely to continue to move higher as investors seek safe-haven assets. And despite the current pessimism around precious metals as a store of value, Schiff sees a surge in gold buying as fear returns to the market. He notes a significant shift in sentiment, with minimal bullishness despite strong gold fundamentals. He anticipates a substantial rally for gold but can’t predict the exact timing.

Gold-Backed Bitcoin Can Save the Economy?

Peter Schiff, a vocal advocate for gold and a critic of speculative digital assets, recently delivered the keynote speech at the London Blockchain Conference. Known for his outspoken views, Schiff has often clashed with Bitcoin (BTC-USD) enthusiasts on social media. His presence at a blockchain event drew attention due to his contrasting stance on the technology.

Despite his criticisms of Bitcoin and digital assets, Peter Schiff holds a positive view of blockchain technology and digital currencies. He believes that blockchain, along with gold, can play a crucial role in the global monetary system, especially as he anticipates a looming financial crisis.

He believes Bitcoin is fundamentally flawed and backed by nothing, just like a fiat cryptocurrency. Schiff feels gold could replace the dollar as the primary monetary reserve. That shift might happen through the private sector using blockchain technology. His stance may surprise those who see Schiff as a Bitcoin critic.

Schiff differentiates between BTC and blockchain. He believes the blockchain, backed by gold, can enhance gold’s functionality for exchange and accounting. He maintains gold’s value as a store of value remains unchanged.

Schiff emphasizes gold’s need to be transactable to serve as a currency, highlighting the advantages of blockchain in this context. He also differentiates between blockchain and BTC by underscoring Bitcoin’s volatility and costliness. Schiff proposes a system that tokenizes real gold using blockchain, creating an ideal blueprint for a new reserve currency.

Can Schiff’s View Be True About Gold?

While Schiff makes bold predictions about gold reaching $5,000, other experts have differing views.

Some believe the recent drop in gold prices is a temporary blip, and it will rebound. These experts argue the Fed’s announcement of tapering quantitative easing could lead to inflation fears, driving investors back to gold.

Others point out that gold has been trending downward for the past few years, and it may continue to do so unless there is a significant catalyst. They believe other assets, such as stocks or real estate, offer more attractive returns in today’s market.

Ultimately, whether gold hits $5,000 remains to be seen. However, one thing is for sure: Investors will keep a close eye on gold prices and the Federal Reserve’s monetary policies as they make their investment decisions. And, as always, only time will tell who was right in this debate about gold and its future.

On the date of publication, Chris MacDonald did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.