NEW YORK (AP) — Scrambling to protect themselves against a U.S.default, investors are buying gold and foreign currencies, usingderivatives to bet on a stock market collapse and taking outcomplicated insurance policies.

They may want to consider crossing their fingers.

If the United States suddenly stiffed its creditors, the impactwould be so widespread, complex and unpredictable that it is nextto impossible to shield against steep losses, experts say.

A default could cause turmoil in the stock and bond markets,plus a replay of the fear that froze lending in the depths of the2008 financial crisis. In the chaos, investments you'd think were asure bet to fall might rise instead, and vice versa.

Consider the assets at the heart of the crisis — Treasury bonds.You would expect interest rates on Treasurys to rise the closerWashington gets to missing a debt payment. Investors would demandhigher rates because of the greater risk they wouldn't get theirmoney back. After Argentina defaulted in 2002, foreign lendersrequired higher rates.

But some bond traders are betting the opposite will happen. Theythink nervous money managers could rush into Treasurys ifWashington blows past the Aug. 2 deadline to raise the debtceiling. The buying would push interest rates lower.

The logic behind this seemingly illogical reaction: Treasurysare widely traded around the world, with plenty of buyers andsellers ready at a moment's notice, a quality known as liquidity.Investors like that, especially in a crisis, and may overlook fearsof missed payments.

Gifford Combs, a portfolio manager at Dalton Investments, whichmanages $1.3B in assets, has been buying short-term Treasury billsfor this reason. But he concedes he's not sure what could happen inthe event of a default.

"If there is a financial meltdown and panic, you don't knowwhere investors will go," he says.

A second reason to like Treasurys: A default could help sink theeconomic recovery. Dan Greenhaus, chief global strategist atbrokerage BTIG, thinks Washington is likely to continue payinginterest on its bonds, keeping creditors happy even if it meansgutting other government spending. The massive drop in governmentspending would then drag down the economy. And when economic growthlooks grim, traders turn to Treasurys.

"No matter what happens, Treasurys are still the safe haven,"Greenhaus says. "No other market is as large or as liquid."

Some investors are hoping high-quality corporate bonds serve asa backup safe haven. Wilmer Stith, the portfolio manager of the $3billion MTB Intermediate-Term Bond Fund, has been buying bonds ofcompanies like IBM and Microsoft that have strong balance sheetsand high credit ratings.

Others are seeking protection in credit default swaps, theinsurance policies that pay off if a company or country defaults onits debt. The cost of buying protections against a U.S. default hasbeen rising fast, reflecting high investor demand.

To insure $10 million worth of Treasurys for a year, investorsnow have to pay almost $50,000 — double what it would have costthem just two months ago. That's about what it costs to insure anequal amount of bonds issued by Russia.

As with bonds, stocks could be thrown into turmoil in adefault.

To help protect his clients, Stuart Speer, a financial adviserat Heritage Advisors in Overland Park, Kan., has bought "puts" forshares that track two stock indexes — the Standard & Poor's 500and the Dow Jones industrial average.

The "puts" give him the right to sell those shares in the futureat roughly today's prices. So if stocks tumble on a U.S. default,his clients can buy shares at low prices, sell them for thelocked-in higher prices and pocket the difference. Those profitswill help offset any losses they face from their own stockholdings.

Speer thinks the odds of default are slim — but he's stillworried. "If the U.S. defaults, it could be a calamity," he says."People will lose confidence in the markets."

Here are some other indicators to watch in the coming days forclues on how investors are getting ready for a U.S. default.

— Treasurys: How will you know if China, the largest foreignholder of Treasurys, loses faith in the U.S. government? Bondyields will leap. The main Treasury to watch is the 10-year note.Its yield acts as a floor for mortgages and other lending ratesthroughout the economy. Everybody has been watching for signs ofpanic, but the market has remained calm so far, responding insteadto worries that the economy is slowing down. The yield has hoveredbelow 3 percent since June.

— Gold: Investors are piling into gold on fears of a U.S.default, pushing the metal on Monday to $1,612 per troy ounce. Butunlike a lot of metals, including silver and copper, there are fewcommercial uses for gold. That makes it difficult to guess just howmuch it really is worth, and whether the price rally will continue.But its high price is a good indicator of how scared peopleare.

— Stocks: Concerns about the debt ceiling haven't hampered thestock market yet. The Dow Jones industrial average twice jumped bymore than 100 points over the last week thanks to strong corporateearnings from Microsoft, IBM and Coca-Cola. But most marketanalysts think a deal will be reached and haven't laid out astrategy in case it's not. "I don't know how you could trade thisin the short run except for waiting for greater clarity," saysJonathan Golub, chief market strategist at UBS.

— Mutual funds: Everyday investors do not appear to be makingdrastic changes to portfolios. In the week of July 13, the lastweek of data available, investors pulled $4.1 billion out of fundsthat invest in U.S. stocks, according to the Investment CompanyInstitute. Investors pulled $4.5 billion the week before,continuing a pattern of selling that dates back to May. Bondinvestments followed the same pattern. Investors moved $4.8 billioninto bond funds in mid-July, a slight decrease from the $6.1billion put into bonds the week before.

— Currencies: Monty Guild, head of Guild Investment Managementin Los Angeles, says he's trying to protect clients by buyingcurrencies issued by countries that have been more prudent withspending. His top choices: Singapore dollars, Canadian dollars,Brazilian reals and Australian dollars. The bet is that as the U.S.struggles to pay its debts, more investors will put money in thesecountries, lifting the value of the currencies.