theo wrote:The broker's advice was to "go into cash" but that move has its own risk. To a broker, cash usually means a money market account which (correct me if I'm wrong) is basically a mutual fund of short-term debt instruments. I've heard that some of this debt is European. Someone at work claimed that a few of these money market funds have as much as 40% European exposure. This seems a little high, but any exposure is a concern even with short-term debt.
As Europe heads towards a slow motion collapse, I think raising some cash here makes a lot of sense. I'm trying to hold off purchases of gold and silver, but I've been dabbling with each drop in PM prices because I can't help myself. As far as money market risk, read the prospectus, or better yet, just put the money in a bank savings account. The delta in interest between a money market and a bank savings account is minimal. If Europe does have any sudden calamity, you can bet PMs will go down as much as stocks in the short term. The dollar will be king during that time. Long term I'm definitely a PM bull though. The only way out of a debt crisis, short of default, is to inflate your way out. I don't think governments are ready for an major defaults, maybe some haircuts, but not default. They'll print all they can get away with first.
