I am still waiting. Are you? I am still waiting on this beast of a cup and handle chart to do its thing and get a breakout going from a 30 year cup and handle price chart.  When I think about it, it still boggles my mind how large this price chart formation is.  Yes indeed folks, if you were 20 years old in the year 1980 and familiar with the business of trading in stocks and commodities, then you would have had to wait until you were 50 years old for this cup and handle chart to complete its formation.

30 years of watching stock prices is a long long time for anyone that has been in this business. Heck, just watching prices of any security for more than a few days can be pretty exhausting.

I don’t mean to get too long winded here, but I am trying to just bring light to how huge an event this really is assuming it actually happens.  If the gold price is able to break out and hold above 1000 an ounce, then that by definition should mark the beginning of the breakout.  I am expecting this move to be almost a near vertical type of move that is quite persistent.  Surely there will be down days, but I suspect once things really start to get in gear we will see plenty of repeated up days that mark the epicenter of the breakout.

Never before have I seen a chart so large that has so much cause for an extended move.  The last time we saw this amount of trading cause for a move was the bull market that began off of the 1967 to 1982 sideways trading range that launched an 18 year bull market into the year 2000 in stocks.

Fascinating also is the fact that gold has already come quite a ways since the lows of 2001.  One might think that the move that has occurred since 2001 is too much of a move and that prices are ‘too high’.  But in the context of the whole trading range and pattern since 1980, one can clearly see that the move since 2001 was merely the right portion of this large cup formation setting up for an eventual breakout.

I remember thinking in 1994 during the stocks bull run that prices were ‘way too high’ and I looked at a very long term price chart of the bull market and could not believe my eyes how ‘steep’ it was and that it just seemed almost impossible that prices could go even more vertical… well we know what happened after 1994.  And do we know what will happen to gold after 2009?  I have a pretty good idea.

By the way, it is possible to measure price targets of cup and handle charts no matter how large or small they are.  Simply measure the depth of the cup and then add to the highest price point at the right side of the handle.  That comes out to close to 1800 on the gold price with assuming a 100% probability success rate of the cup and handle pattern.  Bulkowski in his book “The Encyclopedia of Chart Patterns” indicates that cup and handle patterns have a 50% success rate. So even with only a 50% success rate assumed we would still get to close to 1400 on the gold price.

Stay tuned because I have discovered a couple of other important features of the handle on this price chart. More on that later.

Ok today is Friday June 26, 2009.  I have been watching the gold price for quite some time now.  It has been quite a journey and certainly the volatility of last year and into this year has been nothing short of amazing.  The gold market has really tried to do a good job of discouraging everyone from noticing it.  And for the most part I think it has succeeded.

But now it is time to put my finger on the chopping block and make the first recommendation of the letsgold video newsletter.

I am going to use this post here at letsgold.com to initiate the first recommendation of the letsgold.com video newsletter.   The letsgold.com newsletter is not quite live as of yet although I do have links to the signup page and a few banners throughout this site promoting it.  I expect it to go live hopefully by the end of this weekend assuming I can work out all of the technical kinks.

But since this is the first recommendation of the letsgold.com newsletter I wanted to make it a public post to get things off the ground here.  All future recommendations will only be posted in the members area.  A duplicate of this recommendation will be posted and recorded in the members area of letsgold along with some video coverage of the thinking behind it.

The recommendation is:

1. Go Long the GLD etf this morning (it closed yesterday at 92.29) at the market open with a protective stop loss set at 89.75. Assuming the stop loss is not triggered in the weeks ahead, then a 10% trailing stop will be initiated soon thereafter. We will have to see what the market opening price is and I will update it right here in this post at 9:30 am. Right now it is 9:09 am.
2. The second and third recommendations fall in the ‘most speculative’ category. The second recommendation is to go long the DGP this morning at market open with a protective stop loss set at 19.00. No trailing stop will be initiated at this time.
3. Lastly, and also in the most speculative category is to go long the December 2009 GLD 100 Calls at the open. As of yesterday they were trading around 4.00. This one will require more careful watching. But for now as long as GLD does not break back down under 92.30, this GLD call should be held.

Ok there you have it. The first recommendation of the letsgold.com video newsletter.  I am going to put up the first video in the members area going into a bit more detail about my thinking behind these trades, but again the members area is not quite live yet.  Give me until the end of this weekend, early next week and it should be good to go.  I will post in here when we are ready to go live.

Ok, it is 9:30 am now. The open on the GLD is 92.80, and the open on the DGP is 20.47. The ask on the GLD December 100 calls is 4.20, so I am going to mark 4.20 as the entry price.

Ok that’s it for now.

God Speed to all of you.