Hedging out of stocks in a downturn

Dry powder is what Berkshire's ~$345bn in T-bills actually is: it preserves capital and earns ~4% while Buffett waits — it does not pop when stocks fall. A true hedge is a different animal: an asset you expect to rise because equities are falling. Buffett deliberately holds bills, not long bonds and not gold, because his goal is optionality, not a crash payoff.

If you just want your money safe and ready to redeploy, you want short-dated government paper or a money-market fund — near-zero duration, no equity correlation, a steady yield. The mechanics (the SGOV "sawtooth", acc vs dist, ex-dates) are covered in depth in the "How T-bill ETFs pay you" topic; below is just the shortlist with ISINs.

Also valid and not in a wrapper: IBKR pays interest on idle cash (above a ~$10k / €10k threshold, scaled by account size), or you can buy T-bills directly (type US-T in IBKR) and German Bubills / Schatz / Bobl — the literal euro counterpart to US bills. US-listed SGOV / BIL exist but EU retail brokers can't sell them (no PRIIPs KID) — hence the UCITS rows above.

The one model to hold for any USD instrument when you live in euros:

real return (in €) = USD yield  ±  EUR/USD move

The USD-vs-EUR yield gap is only ~1.5pts (≈3.8% vs ≈2.2%). EUR/USD routinely swings 5–10% a year — so the currency move dwarfs the yield difference. Picking US bills "for the higher yield" is really a dollar-bullish bet in disguise. And there's no free lunch: the forward market already prices the higher-yielding currency to weaken by the rate gap, so an EUR-hedged US-Treasury fund, after hedge cost, lands back at the euro yield anyway. If you'll spend/redeploy in euros and have no FX view, take the euro options and the certainty. Reach for USD only if you genuinely want dollar exposure.

If you want something that actually climbs in a crash, there are two classic choices and they fail in different ways. Long-duration Treasuries rally when rates fall in a flight to safety — but carry heavy duration risk (a 20y+ Treasury fund fell ~30% in 2022 when rates rose, right alongside stocks). Gold has no duration and no coupon, so rising rates don't mechanically crush it — but it pays no income and trades like a momentum asset.

1. The shock is inflation or currency debasement, not a growth scare. In 2022 inflation pushed rates up, so stocks AND long bonds fell together — the bond hedge failed exactly when needed. Gold, with no coupon to discount, held up.
2. You want zero rate/duration risk. That's the same reason Buffett holds bills not bonds — gold sidesteps duration entirely.
3. The fear is systemic / geopolitical / fiat distrust. Gold is no one's liability; a bond is a promise from a government. It isn't tied to any single country's monetary policy.

1. A deflationary recession or pure growth scare where central banks cut hard — long Treasuries rally strongly (price rises as yields fall); gold's reaction is less reliable.
2. You want income while you wait. Bonds pay a coupon; gold pays nothing and costs you the TER. This is Buffett's explicit objection to gold.
3. You want a calmer, more predictable mark — gold near record highs has had sharp daily drawdowns even mid-rally.

Caveat for both: in a sharp forced-liquidation crash, gold and long bonds can fall withstocks in the first days (everything is sold for cash) — only bills truly stay flat. Gold tends to recover its stabilising role over longer horizons.

As with SGOV, the famous US gold ETFs (GLD, IAU) aren't sold to EU retail. In Europe single commodities are ETCs — debt securities backed by allocated physical bars. A handful dominate; all hold real metal at ~0.12%.

The usual default is SGLD or SGLN — both huge, liquid, allocated, cheap. On IBKR pick the EUR-denominated listing (e.g. on Xetra), not the GBP line on LSE, or you pay an FX conversion on every trade. ISIN is the only reliable identifier; the ticker changes by exchange.

Gold is priced in USD globally, so buying the "EUR line" of an ETC does not remove dollar exposure — the euro price just carries the EUR/USD conversion underneath. Here's the counterintuitive part for a safe-haven leg: leave it unhedged. When equities crash the dollar typically strengthens against the euro and gold rises — an unhedged position catches both. EUR-hedging strips out exactly the defensive USD kick you want in a panic. So unlike your cash parking (where you hedge to euros to kill FX risk), for a gold hedge unhedged is generally preferred. Hedge only if gold becomes a large allocation and you want to remove EUR/USD noise.

*Headline TER; the daily currency hedge adds the EUR/USD rate-differential carry on top, so the true cost of any hedged share class runs higher than the sticker.

If your thesis is a growth scare / rate-cut cycle rather than inflation, long Treasuries are the purer play. These are volatile (that's the point — duration is what makes them rally), so size accordingly.

The DTLE EUR-hedged class removes EUR/USD noise for euro investors — sensible here, since (unlike gold) a flight-to-safety rally in US rates is the thing you're buying, not the dollar.

1. Spot gold XAUUSD (unallocated) — a general claim on a bullion dealer's metal, not allocated bars; carries counterparty/credit risk, a ~10bps carry fee, T+2, and needs metals permissions. The ETC is cleaner (ring-fenced bars, no derivatives permissions).
2. Gold CFDs (GOLD) — leveraged and relatively expensive on IBKR; not for a hold.
3. COMEX futures — for sophisticated use, physical delivery possible; overkill for a parking hedge.

1. Interactive Brokers. Paste the ISIN into search. One ISIN shows several rows — one per exchange/currency. Pick the row whose currency matches the class you want (EUR on Xetra/GETTEX; USD/GBP on LSEETF). The currency column tells otherwise-identical rows apart.
2. Trading 212. Paste the ISIN (or fund name); verify the ISIN on the instrument page before buying or adding to a Pie. T212 carries only a curated subset, so a specific listing may be missing — the Acc/Dist sibling or another-currency listing is often there instead.
3. Sizing. Gold of roughly 5–15% tends to improve a portfolio's risk profile; it complements rather than replaces stocks/bonds (it generates no income). Gold is near record highs with real volatility, so phasing in over time beats a lump sum at the top.

Golden rule on either platform: a name or ticker can map to several listings — always confirm the ISIN and currency on the instrument page before you buy.

Decide the job first. Want capital safe and ready to redeploy → dry powder (€STR / T-bills / short govt bonds), in your spending currency. Want something that pays off in the crash → a true hedge: gold if you fear inflation, debasement or a systemic shock (unhedged, ~5–15%), or long Treasuries if you fear a growth scare and rate cuts. They are not interchangeable, and the currency call usually matters more than the yield.

This is the framework and the mechanics, not a recommendation — not financial advice. The right vehicle and sizing depend on your horizon, your spending currency, and how much volatility you can carry. Yields/TERs are a June 2026 snapshot; check live figures before buying.