By Paul R. La Monica

You're nervous about the stock market and the economy because of the Trump tariffs. And bonds are in a meltdown. Is there anywhere left to hide?

Well, it's good news, bad news: There are places you can put your money, but the number of safe havens is two.

Cash and gold.

Let's go for gold first.

Gold dipped ever so briefly earlier this week, but is now above $3,100 an ounce. The precious metal is up nearly 20% this year.

John Canally, of TIAA Wealth Management, explains why gold has been going higher -- and why it could eventually fall. It's a classic fear trade. Almost everybody wants to own it when headlines are scary.

"The problem with gold is that in good times it's going to lag. It's a proxy for cash," Canally, TIAA's chief portfolio strategist, told Barron's.

Both the trade war and its economic fallout are stoking the appetite for gold, wrote Alex Tsepaev of B2PRIME, a global financial services provider for institutional and professional clients.

"The current situation -- high geopolitical tensions and the consequent economic instability -- boosts the demand for gold," said B2PRIME's chief strategy officer.

"Moreover, there is increased discussion about the upcoming recession...this negative sentiment only feeds investors' appetite for gold," Tsepaev said.

Gold might also benefiting from the the move out of Treasuries.

Big foreign central banks, notably China, hold billions in U.S. notes and bonds, and may be unwinding some of their holdings as a way to retaliate against tariffs. Total foreign holdings stand at roughly $8.5 trillion.

"While pushing down the value of their holdings is certainly not in their best long-term interests, it would be a viable short-term strategy to send a signal that everything is on the table," Colas wrote.

"As a sidebar, gold would benefit from this action, since non-US central banks would likely replace Treasuries with gold because it is still a dollar-based asset," he explained.

And cash is always king -- the old standby, the stalwart, that trusted friend -- in times when Wall Street seems to be littered with potholes.

That isn't stuffing the mattress with a bunch of Grants and Franklins., though. It's buying money-market funds that invest in cash and short-term government securities.

Several top money-market funds from Vanguard, Charles Schwab, Invesco, Fidelity, and JPMorgan Chase all offer yields above 4%.

They aren't going to make anyone a fortune, of course. But that's not the point.

The Vanguard Federal Money Market Fund, for example, has an average 10-year annualized return of 1.8%. That lets the jittery relax but certainly isn't going to make them rich.

Cash and gold are safe. They aren't going to build great wealth over time.

That's important to really remember in these tough times. The stock market is ugly, but dumping everything isn't the answer either.

"Cash right now is the bright and shiny object," Canally told Barron's. "But we tell our clients...that if you are trying to time the market, you have to get many decisions right. Cash is not a great long-term store of value."

Parking some of your money in money-market funds and gold will calm those nerves now. But also remember to think about the future -- five years, even 10 and 20 years out.

Think hard about what stocks to buy. Then, keep them.

Write to Paul R. La Monica at paul.lamonica@barrons.com

This content was created by Barron's, which is operated by Dow Jones & Co. Barron's is published independently from Dow Jones Newswires and The Wall Street Journal.

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April 09, 2025 16:37 ET (20:37 GMT)

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