Is this a sign of things to come? Banks charging you a fee to deposit your cash? Well believe it or not, it’s true and we believe it is indeed a sign of things to come.
According to the Bank of New York Mellon, it’s getting so overwhelmed with large cash deposits that it plans to begin charging such fees to large depositors for the privilege of holding their cash for them. The plan calls for a charge of 0.13%, and if the one-month treasury falls below zero, there will be even more fees.
As bizarre and almost humorous as this idea sounds, the real message here is just how much fear exists in the markets today. These fears are fueled by political unrest, concerns over American and European debt, global interest rates and credit uncertainty, just to name a few.
In simple terms this translates into the wealthiest and most astute investors saying, “Here hold all my liquid funds, don’t pay me any interest, just make me feel safe.”
And that’s what we hear from our clients day in and day out: “Just make me feel safe”. Preservation of capital seems to be rule number one with a rule number two reminding us to look a rule number one. This drive for preservation has caused a great flight to cash and then to hard assets instead of soft paper.This is where our management philosophy lies. There are alternative assets where you can get both safety and good income.