Assuming the Fed is going into a major easing cycle and will come close to the rates in the EU and Japan then what should U.S. investors do? Increase bond portfolio duration but only with bonds that offer significant call protection and only with investment grade bonds. Avoid BBB rated corporate or BBB rated Muni bonds. If you own bonds subject to a call provision (mortgage backed bonds, typically) be sure not to own them if they trade over par as they may be called and paid off at par thus depriving you of the bond premium.
Be careful not to have too much duration as no one knows what the future will be like; there is no guarantee that the U.S. will have its rates decline down to zero for ten year Treasuries; there is always the possibility that by some unknown method, that inflation or devaluation could trigger a rise in bond yields during an inflationary depression. However, I doubt the U.S. can devalue faster than other countries so this may not be an issue.
Once rates have come down to zero for long term rates then bonds will only be useful as a store of value, rather than as a source of capital gains. If there are slightly negative rates these would be acting somewhat like paying a warehousing fee to store your money, rather than an investment that provides a profit. However, there is the risk that yields on long term bonds could go up, thus making their price go down. Once stocks and other risk-on assets crash and reach a good low price during a negative interest rate regime then it may be appropriate to move into quality risk-on assets and away from bonds. Buying gold may not work, since a truly great depression would trigger a repeat of the 1933 U.S. confiscation of gold and extremely high taxes that punish those who benefited from a rise in gold mining share prices. Unless a great crisis were to occur gold may not go up that much. Gold should now be worth about $800 based on its relation to inflation. The reason it is higher at 1,300 is because the market wants to pay up for the optionality that it could be worth more in a crisis. I think the trend with central banks and government control of the economy has been for them to assert an increasing degree of control and thus they will be reluctant to let gold rise dramatically or to restructure the dollar to make it a gold backed currency. Instead they will repeat the playbook of the New Deal of 1933 and thus gold won’t help investors.
The reason for inflation of 1965-82 was due to left-over effects of anti-deflation policies of the 1930’s such as pro-union, anti-import rules, price supports, etc. Today’s globalized economy is able to suppress goods inflation and dampen some service industry inflation. Thus a repeat of the inflation of 1965-82 and gold’s big rise is unlikely.
Investors need independent financial advice about how to handle living through an era of negative interest rates.