In terms of investment themes, Mr Donay prefers high yield and investment grade corporate bonds, and underweights sovereign bonds.

"The problem of debt is that of states, not companies. If you take the debt to equity ratio of US and European companies, that stands at 50 per cent. At the peak of the TMT bubble, we were at 120 per cent. That means that in terms of financial fundamentals, companies are quite strong. That's why we strategically overweight corporate bonds."

Another strong theme in Pictet is gold, where it sees a bull market until 2015. Its target price for gold is US$2000 per tonne.

Pictet group managing director Yves Bonzon says gold is an alternative currency as long as there is uncertainty over the future of paper currencies and the floating rate regime. Supply demand dynamics are also favourable for now.

"Based on the dynamics of production, gold will most likely increase in price for at least another five years, simply because we don't expect an increase in gold production for another five years. After that, production will respond to higher prices, and the supply balance will start to shift. But the monetary issue will overwhelm the supply/demand dynamics."

The caveat, he adds, is the risk that governments could confiscate gold as Mr Roosevelt did in 1933, or through punitive tax rates on gold holdings.

"That's the downside case. As governments debase currencies to solve the debt problem, there could come a point when governments will be tempted to confiscate gold."

Pictet is recommending a weighting of five to 15 per cent in gold.

This article was first published in The Business Times.