With the S&P 500 near 52-week lows this year, investors are searching for clues on where equities could head. And while many assign blame on the collapse in oil and economic uncertainty in China, one of the Federal Reserve's fiercest critics is pointing the finger at one person: Janet Yellen.
"Unless the Fed totally capitulates, this bear market is going to be brutal," Peter Schiff, head of Euro Pacific Capital, told CNBC's "Futures Now" on Tuesday. A bear market is loosely defined by a 20 percent drop from a recent high. The S&P 500 is down 13 percent from its May high.
"What we need to stop this bear market, is full-on quantitative easing from the Fed. Every time the market has corrected, since 2008, it's always been the Fed that's made the bottom," said Schiff. "The Fed has always saved the market either by cutting rates, launching QE or threatening to launch another round of QE. So, they're going to have to give the drug addicts on Wall Street what they want."
Schiff vehemently maintains that central bank policy has served as the most destructive force in the U.S. economy. The S&P 500 has fallen 9 percent since the Fed raised interest rates in December for the first time in nearly a decade.
For Schiff, the U.S. will stay in a recession and stocks will continue to fall unless there's a reversal in policy. "I think the bubble has already burst. The question is if the Fed is going to fill it back up with air before too much comes out," he said. "This is an election year and Janet Yellen is playing a game of chicken with the markets."
The Fed critic has long voiced his opposition to monetary policy, but given the recent volatility, he is more convinced than ever that the Fed will have to reverse its course. "The only question now is how much longer the Fed will wait before it indicates rates are not going up, then cuts them to zero, launches QE4 and then lowers rates to negative," he said.
As far as his other bold predictions, Schiff maintains that gold will eventually hit $5,000 an ounce. "Gold is up $150 since the day after the Fed hiked rates," he noted. Gold has been the best performing asset in 2016. "Gold now has to reverse the last three years of loses because they were all based on a fantasy of a legitimate U.S. recovery. I think we're heading a lot higher."
Ultimately, Schiff believes gold will hit $1,300 per ounce in 2016 with potential to reach $5,000 in the coming years provided that the Fed cuts rates and relaunches QE.