DJIA Down over 600 points, gold up to over $1720 - Crazy Day in the Markets

The stock market took a fairly epic dive today, with the Dow Jones Industrial Average plummeting 620 points to close at below 11,000. As a percentage, the dropped 5.5%, while the NASDAQ was slammed with a 6.9% drop.

Much of the craziness was driven by S&P's downgrade of U.S. sovereign credit rating over the weekend. This was triggered by the so-called debt crisis of last week, which we talked about here. The markets are seeing the same things that we've discussed here - -U.S. government spending is out of control and things aren't looking rosy. Of course, the markets get into panic mode and start selling like mad, which doesn't help the matter, either. 

During today's plunge, Investors looked to move to safe havens, which, in many cases, ironically took the form of the very U.S. Treasuries that S&P had downgraded. Gold, a safe haven in high-risk times, shot up $69 to over $1720 per ounce, a record high close. Investment firms are forecasting gold at between $1850 and $2500 before the end of the year.

Here's a great quote from WSJ.com:

"Everyone's running to the fiat currency, gold," said Dave Kavanagh, president of the Grant Park Fund in Chicago. "The market's telling [Washington] right now that we don't think that you can get your spending under control," he said.


President Obama did little to assuage investor fears Monday afternoon as he said that the S&P downgrade should provide a "renewed sense of urgency" to tackle the deficit. Indexes hit fresh lows while the president spoke, and again afterward.

I like how Obama speaking has a negative effect on the market. Good work, Prez!

Silver, meanwhile, was up 1.85%, closing at around $39 per ounce. If you're looking to buy precious metals, silver looks to be the bargain. Gold has skyrocketed over the past few weeks, while silver has remained relatively stable in the mid to high 30s.

We'll see how else this plays out of the next several days, but I'm fairly concerned we're in for another recession--that's if we ever really made it out of the last one. Interesting times ahead.