Dollar Savings Direct, a division of Emigrant Bank, now offers depositors a competitive savings rate. After a many year hiatus from the online savings market, Emigrant returns to a competitive position for a company that a decade ago was a pioneer in the online savings space. It remains to be seen whether Emigrant intends to compete for the long-term in the savings and CD arena. At various brief intervals, Emigrant – through Emigrant Direct, Dollar Savings Direct and My Savings Direct – has experimented with attracting depositors with a high rate only to drop the rate, sometimes quite precipitously, after a couple of months.

Since the market meltdown in 2009, Emigrant has also from time-to-time marketed distressed real estate to deposit customers that the bank had repossessed through a “real estate opportunities” link on some of their online banking websites.

Now Dollar Savings Direct (Emigrant) is selling gold.

My personal opinion (no recommendations attached) is that this is a very interesting time to be buying gold. I have never been a gold bug, but it seems to me that the only long term solution for the US to handle its debt is going to be to deflate the value of that debt over time. Therefore, inflation and long-term US dollar rates will need to rise. Likewise, the Trump Administration is prepared to engage in a trade war and to talk down the value of the USD, as Steven Mnuchin did in Davos this morning. I am hesitant to invest in the British pound or the Euro in front of Brexit and the likelihood that the ECB will also race to devalue its currency. I think that anyone investing for more than a couple of hours in emerging market currencies or bitcoin should have his or her head examined. This leaves the shinny yellow metal as an interesting store of value versus the US dollar.

But, the Emigrant proposal just is not yet attractive. While they will deliver the gold that you buy directly to you, most purchasers will opt instead to have them hold and store it for you. Their storage fees, which are layered on top of their transaction fees, are 80 basis points a year. 80 basis points, especially compounded over any length of time, can really take a bite into any appreciation that you are looking to get in the asset (and the asset doesn’t produce any dividends or interest to offset it).

The SPDR Gold Trust (GLD) and the IShares Gold Trust (IAU) represent much more attractive alternatives with better liquidity (tradable any time that the market is open), potential tax advantages of an ETF, and much lower carrying charges. These things aren’t small funds - one is over $36 billion and the other is almost $11 billion - and they are fully vetted by regulators of all sorts and by the media (Bob Pisani of CNBC, among others, went several years ago to see the vaults in London).

I am not a fan of the 40 basis points that GLD charges and the 25 basis points that IAD charges (I think that Blackrock and State Street could charge much less), but these are still less than half of what Dollar Savings Direct or Emigrant are going to charge you to hold the bars for you.

It seems to me that Emigrant is trying to rescue a business model that may have been attractive in an earlier era, but that is largely obviated by ETFs (that of being a custodian for precious metals) on the backs of unsuspecting depositors attracted to their savings rates.

Purepoint MUFG, a subsidiary of the Japanese conglomerate Mitsubishi UFG Financial Group, entered the online banking market in late 2016 in a very aggressive manner, offering what was then the highest online savings and highest 1-year CD rates.

Through early 2017, Purepoint stayed competitive, raising its rates faster than many of its largest competitors and offering a service which by many accounts was positively reviewed. Read reviews of Purepoint here.

Then, something happened. In late 2017 and early 2018, as the other major players – Ally, Goldman, Synchrony, Barclays – and many smaller players began raising their rates, Purepoint froze theirs.

Today, Purepoint’s savings rate is competitive, but far from the highest rate that we have become accustomed to seeing in 2017. See all the best online savings rates here. Its 1-year CD rate stands at 1.55% and that is simply not competitive in the world of one-year CD rates.

As reviews became less enthusiastic, we noticed that Purepoint began opening a series of overstaffed so-called banking centers all over New York, Chicago, Dallas, Houston, Miami and Tampa. They have taken some key locations, with their first center opening in the middle of 2017 at American Express’s outpost on 53^rd and Park Avenue in New York. Other locations, many of which are still unopened, are listed here. We’ve also been alerted to the fact that Purepoint seems to be offering slight enhancements on its CD rates to customers in those markets where it is opening these centers (about 10 basis points on its 1-year CDs, but still not competitive).

It isn’t a complete novelty for an online bank to open a banking center. ING Direct did this in the early 2000s in order to promote their brand in New York, Chicago, San Francisco, Los Angeles and Atlanta and to branch into other products. But, at that point, ING Direct had already mastered online banking and the centers were Starbucks-like places to hang out.

If Purepoint intends to continue to be a player in the online banking space, they will need to raise their rates as fast as their competitors. They’ll also need to offer the same rate consistently throughout the country, to provide phone support off hours like their competitors do, and to make their banking centers into something that someone would want to visit more than once.

2018 started with a complete bang in global financial markets. The Dow Jones Industrial Average broke 25000 and seems well on its way to 26000. Not only did our President say that it could go much higher in 2018, but so did David Tepper. The latter, of course, is one whose opinion matters. He is not only a real billionaire, but has real and tested insight into financial markets.

That having been said, it is still an important time to keep one’s wits and not to be over-exposed to financial markets. Crashes just as severe as the ones that we had in 2000 and 2008 could easily come from excesses like we have today and, as in the past, there will be no warning.

It is important, therefore, to pay attention to another big bang that we have seen in the first week of 2018. That is the pronounced rise in the best savings and CD accounts.

Last week, we suggested that rising rates in 2018 will finally offer a reason for investors to finally move from money center banks or major brokerages – where cash earns basically nothing – to savings and short-term CD rates. We have suggested concentrating on savings rates paying at or over 1.40% and one-year CDs at or over 1.70%.

This week we saw both Synchrony Bank and Sallie Mae Bank raise their online savings and money market rates to 1.45% APY. We also saw Dollar Savings Direct raise its online savings rate to 1.60%. These banks all rank highly on BestCashCow and if you have $2 million to move from Merrill Lynch, Goldman Sachs or Morgan Stanley, you might start by opening an account at each of these. You’ll be covered in a personal account up to $250,000 at each bank by the FDIC (or $500,000 in a joint account). See all of the best online savings rates here.

The first week of 2018 has also brought us our first 1-year CD in years that pays over 2%. Other online banks have recently raised their online on-year CD rates to or above 1.80%. These rates aren’t certain to extend into February, and January could be a good time to lock into a great rate for money that you definitely won’t need until 2019.

Last week, we encouraged investors to be cautious about locking into 5-year CD in a rising rate environment. We reiterate that caution, but we are seeing interesting 5-year CD products and interesting special term CD products in some markets.

Again, Happy New Year!