Turmoil in global credit markets may lead to the collapse of a North American bank, pushing bullion prices up to $2,000 an ounce as investors seek a haven in gold, Eric Sprott said.

This year's decline in banking and brokerage stocks will worsen, said Sprott, 63, founder and chairman of Sprott Asset Management, which manages about $7 billion. In response, the company is short selling financial stocks and increasing holdings in bullion and mining companies, Sprott said. He declined to name which bank he thought may collapse.

"We're in a systemic financial meltdown," Sprott said in a March 6 interview at the company's Toronto headquarters. "There are probably 10 companies that are broke that are still trading -- banks and financial institutions."

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Sprott said his company's offshore hedge funds have increased the proportion of gold in their portfolios to about 30 percent. The company is also buying small mining stocks that have yet to "blossom," including Dynasty Metals and Mining Inc., Golden Star Resources Ltd. and MAG Silver Corp., he said.

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The Sprott Gold & Precious Minerals Fund and the Sprott Canadian Equity Fund have both more than doubled in the past five years. The S&P 500 Index gained 58 percent in the same period.

Sprott says the collapse of U.K. mortgage lender Northern Rock Plc in September precipitated some bullion purchases by skittish depositors seeking a safe investment for the money they had withdrawn from the bank. That presages the larger effect that a banking failure in North America would have on gold demand, he said, since investors will have few good alternatives.

"Government bonds are a joke at the interest they're paying," Sprott said. "You can buy gold, or other real things: gold, silver, platinum, palladium, things that hold value."