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Are We Nearing McHugh’s “Cataclysmic Nation Changing Event”?

In his book, “The Coming Economic Ice Age” Dr. Robert McHugh warns readers that we are nearing a very major decline in equities given the massive “megaphone” formation that is taking shape in the Dow and many other major indexes around the world. In the book he shows that the same formation was present before other major equity market declines such as 1929, 1957, 1966, 1973, 1987, 2000 and 2008. In fact all major declines since the 1930s have had a widening megaphone which McHugh labels “The Jaws of Death.”

Unfortunately, based on his long term view of history and Eliott Wave analysis, McHugh believes the current pending decline will be much greater than anything we have seen since the 1930s. He has called this impending decline “A cataclysmic nation changing event” and “One for the ages.”

The sequence of events that takes place as these “Jaws of Death” formations mature is as follows:

  1. Jaws of Death formation.
  2. Market crash.
  3. The economy enters a depression
  4. War 

Looking at the world we live in, McHugh’s scenario should not seem farfetched at all. As the U.S. economy continues to slide into greater and greater malaise (I’m not buying the U.S. propaganda at all), the NATO alliance are pushing hard to form a one-world government and to remove the sovereign rights of nuclear powers, Russia and China, aside.  We are now pushing Putin to a point where he has no choice but to wage war, as the U.S. uses clandestine means to surround and then cut off Russia. Likewise, the U.S. is arming Japan in preparation for war with China as we do not want China’s navy to have the right to protect its sea lanes.

These were some of McHugh’s comments on Thursday, Oct.2:

“The world is a mess right now, geopolitical trouble brewing all over the place, and now we see the Ebola virus threatening to become a worldwide pandemic. Hong Kong, Ukraine, ISIS, Libya, Gaza, Irannukes, North Korea, Secret Service, for starters. This is what happens during major Bear Markets, which is what we now have, Grand Supercy-cle degree wave {IV}down. This is because we are measuring the collective psyche of mankind with technical analysis, which is now telling us we are entering a period of se-vere strife. It is going to get a lot worse.

“Our Secondary Trend Indicator generated a new Sell signal Tuesday, September 30th, 2014, and is solidly on a Sell signal October 2nd. Our short-term key trend-finder indica-tors remain on a Sell signal Thursday. The Industrials, S&P 500 and NASDAQ 100 all look to have completed large Rising Bearish Wedge patterns from October 2013. Those patterns look to have topped on September 19th, 2014. That looks to be the top for the multi-decade Jaws of Death pat-tern that started in 1987, and looks to be the top for Grand Super cycle degree wave {III}, which was centuries in the making.”

Where Does this Leave Gold & Gold Shares?

As of last Thursday, McHugh still favored a short-term jump upward toward or around the $1,350 level for gold. But he also acknowledged that depending on how the Eliott waves were playing out, we could see an alternative path that could take gold toward the 1,100-to-$1,175 level.  With Friday’s plunge below $1,200 it seems as though the less favored path may be the one we are seeing for gold. Here is what McHugh said about gold this past Thursday.

“Gold: Note: We updated Gold’s short-term charts, as well as Silver, the HUI and U.S. There are several short-term possible paths for Gold at this time. The one I favor Thursday is that with Gold’s Daily Full Stochastics now deep oversold, it is possible Gold is putting in the bottom for wave b-down of d-up. If so, it means c-up of d-up will soon begin, taking Gold toward the upper boundary of the declining trend-line, toward 1,350ish.”

 But if that is the path that gold takes, McHugh believes that will complete wave (2) down, the three-year primary trend correction from September 2011.


Regarding the shares, McHugh technical work still has the HUI on a sell since August 21st.  I should note that McHugh’s work is in general agreement with Bob Hoye’s views on gold and shares and not at all contrary with Chrles Nenner’s views either.

Personally, I have a lot of trouble seeing the downside for gold shares to be very great given the 10-year chart shown above that has the S&P/TSX Global Gold Share Index very near the lows of the past 10 years, even when gold was selling in the $400s.

I do believe that precious metals markets are “managed” to keep a lid on the price of gold as I discussed when interviewed by www.Capital.gr . Here is some anecdotal evidence in support of that view.  The chart on your left, shows the correlation of growth in the Fed’s balance sheet and the S&P 500.

Now, take a look at the chart immediately on your left. Notice the divergence of gold from the Fed balance sheet starting in 2011 when gold suddenly began a three-year bear market. I believe this was caused not by natural marker forces but by market manipulation in what I call the “virtual” gold and silver markets of London and New York.

Jay Taylor



Disclaimer: The views expressed in this article are those of the author and may not reflect those of Kitco Metals Inc. The author has made every effort to ensure accuracy of information provided; however, neither Kitco Metals Inc. nor the author can guarantee such accuracy. This article is strictly for informational purposes only. It is not a solicitation to make any exchange in precious metal products, commodities, securities or other financial instruments. Kitco Metals Inc. and the author of this article do not accept culpability for losses and/ or damages arising from the use of this publication.
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