Where can investors hide when even gold and cash look dicey?

Some financial advisers were answering phone calls from panicky clients Thursday as stocks dropped 500 points, gold lost its safe-haven glitter and money markets got the jitters.

Michael Kay, a financial adviser at Financial Focus in Livingston, New Jersey, talked a client off the proverbial ledge in the morning as the market resumed its sharp downward trajectory. The client wanted to liquidate his portfolio and invest in gold.

Kay's advice? "If you think it's the end of the world, buy Progresso soup in pop-top cans because it's more valuable than gold. You can't eat gold."

So what should investors be doing as the markets zig and zag?

Alan Haft, a financial adviser in Newport Beach, California, is getting defensive. He has moved about $15 million of his client's portfolios into cash-like investments since early July. He's put much of that cash to work in the Vanguard Short-Term Treasury Fund.

"People are skittish, but the U.S. Treasury is still the safest place when you compare what is out there," Haft says.

Like the von Trapp family in the "Sound of Music," Haft sees Switzerland as a safe haven. He's parking money in Swiss fixed annuities, which are highly liquid but can only be purchased through an intermediary.

"The Swiss Franc has been rocking; many of my investors love the off-shore nature of it," Haft says. He also likes the CurrencyShares Swiss Franc ETF.

In the past few weeks, Haft says he also put $5 million into the WellsFargo Advantage Short-Term Muni Fund because the duration is "super-low" which means interest-rate risk is minimal.

"The whole thing about rising interest rates is that on one hand the economy is not getting any better (which means rates should stay low). But on the other hand with deficit stuff, rates should climb, so it's a quandary," Haft says.

FINDING ALTERNATIVES

Despite all of the turmoil in Italy and Greece, Bradley Bofford, a financial adviser at Financial Principles in Fairfield, New Jersey, says he has not received any client calls about the safety of money market instruments. But his firm has been reaching out to some clients with accounts that exceed the $250,000 FDIC limit. For these high-end clients, he recommends a Certificate of Deposit Account Registry Service, also known as CDARS.

CDARS (www.cdars.com) work like super-sized CDs but offer insurance coverage up to $50 million. They rose in popularity during the 2008 financial crisis. Money is spread around in chunks across a network of "well-capitalized" banks, with maturities of four weeks to five years. The trade-off is a lower yields than traditional CDs.

According to Bankrate.com, the average one-year certificate of deposit is yielding 0.91 percent. One-year CDARS, by comparison, pay 0.26 percent, Bofford says.

TWO STYLES: STAY PUT OR ACT NOW

There are two main camps among advisers: the do-nothing crowd and the do-more crowd.

Over the last three weeks, financial adviser Rich Brooks says he has not had a single client conversation that didn't involve talking about market volatility.

So maybe that's why no one called during Thursday's big drop since it was not a huge surprise, says Brooks, who is vice president for investment management at Blankenship & Foster, which has $320 million under management for 225 clients in Solana Beach, California.

"The current sell-off hasn't really shaken our clients. If we were sitting here today asking why Congress didn't come to a budget deal, then maybe. But we've been working hard to prepare them for the headwinds," Brooks says.

Among the 'do-more' crowd is Pat Dorsey, Morningstar's former director of equity research and now vice chairman of Sanibel Captiva Trust Company, which has $500 million under management.

"My sense is that the best opportunities are going to be European multinationals…which get the bulk of revenue from outside Europe, like Siemens, Nestle or Novartis. It's not like Japanese consumers are going to stop eating chocolate," he says. "If you're willing to step up to the plate a little bit, there are interesting ways to take advantage of this volatility."

STOCKS MORE ATTRACTIVE?

Another make-a-move adviser is Tim Courtney, chief investment officer at Burns Advisory Group, with offices in Oklahoma and Connecticut. At a price-to-earnings ratio of 13.98, the S&P 500 is cheaper today on a trailing 12-month basis than it has been in the past 20 years. What's more, in 1990 you could buy a 10-year U.S. Treasury note that yielded 8.6 percent -- a full six percentage points higher than what you can get today.

Courtney says there's no question stocks offer a great relative value at these levels despite the continued downturn. (And he'd like to know where investors that are pulling out after a 10 percent drop are going to put their money, or when they plan to get back in.) If you can look past the next week or month, stocks are "super attractive," he says.

William Suplee IV, a financial adviser at Structured Asset Management in Paoli, Pennsylvania, says 20 percent of his clients are worried about their portfolios right now. But a whopping 70 percent are sitting tight, "having lived through this several times previously."

And the rest - well, they are using this dip as a buying opportunity," he says. Their secret? "Strong stomachs," he says.