The chase for yield has Americans ditching the dollar for stocks, gold, and yes bitcoin
One assets loss is another assets gain
Especially when that latter asset is priced in the former.
That is exactly the case with the US dollar and stocks gold and bitcoin.
The dollar is seeing it's worst month in a decade, but stocks gold and bitcoin are seeing a solid month of returns.
As the economy has grinded to a halt due to the coronavirus pandemic, and interest rates slashed to zero, governments around the world have fired up the printing presses.
However, Americans aren't happy just holding those dollars anymore...
According to a report out in Bloomberg this morning, Americans are fleeing high yield bank accounts (yes that does sound like an oxymoron these days) in lieu of stocks gold and bitcoin.
Check out how interest rates have faired at the highest yeilding banks over the last couple months:
In a few words, not good.
Lack of yield pushing investors into stocks, gold, and bitcoin...
Since this time last year the yield being offered by these banks has been more than cut in half.
And some, like 28 year old Brian Harrington of California, simply aren't going to sit back and take it any longer.
He told Bloomberg that he is moving his $15k in savings he had parked at Ally Bank and moving that over into bitcoin.
The reason being?
He can't simply hold onto dollars at the present time with things priced in dollars going up and basically being able to earn no interest on his holdings.
He followed that up with saying that he thinks we are going to see a long period of very little economic growth and very little increase in rates.
For those reasons he likes bitcoin in the near term.
I don't blame him.
Do you see an inverse relationship here?
The dollar's pain has been bitcoin's gain
Brian must read my blog because his rational is very similar to the one I have put forth many times in the past on here. :)
What's really interesting is that even though people are currently struggling to earn money, the national savings rate is pretty close to all time highs.
In the month of June the personal savings rate sat at 19%, which is a bit down from the record high 32% seen in April, but still well above what we had been seeing for years in terms of savings.
According to Bloomberg, they saw a 16% increase in deposits from April through June compared to the same time period a year ago.
So, while people can't hold onto jobs they have been stockpiling cash.
Some of that cash is making its way into stocks, gold, and bitcoin.
With another round of stimulus on the way and end in sight to the global pandemic, this is a trend that is likely to continue.
Stay informed my friends.