It’s often said that the wealthy don’t sit on idle piles of cash - they own assets that generate it. That dynamic is on full display among Bank of America’s private clients, whose cash positions have shrunk to levels not seen in nearly two decades.
According to market analyst The Market Ear, Bank of America’s private banking clients now hold just 11% of their assets under management in cash, the lowest share since before the 2008 financial crisis.
Cash allocations among BofA's private clients at the lowest levels in a long time...
undefined The Market Ear (@themarketear) September 6, 2025
These aren’t average investors. BofA’s private bank caters to high-net-worth individuals, families, and institutions, generally those with at least $3 million in investable assets. In some cases, the threshold is closer to $10 million for full private banking services.
The swing in cash levels shows how dramatically investor psychology shifts in different market environments.
During the depths of the 2008 crisis, cash allocations surged to 21% as wealthy clients parked money on the sidelines to weather the storm. Today, the opposite is happening: investors appear more willing to put money to work in markets, either to capture gains or to avoid the erosion of purchasing power from inflation.
The trend mirrors findings from Bank of America Global Research, which reported in February that professional investors’ average cash allocations had fallen to 3.5% — a 15-year low.
There are plenty of reasons for confidence. The S&P 500 is trading at record highs, tech megacaps continue to lead global stock market gains, and corporate earnings have so far proved resilient despite higher interest rates. Flows into stock and private credit markets remain strong, suggesting that risk appetite has not yet peaked.
However, there’s a caveat. Even as wealthy investors lean into risk assets, some are also hedging against the dollar’s diminished purchasing power.
Historical correlations break down
Perhaps the biggest irony of the stock market’s record highs and investor bullishness is the simultaneous eruption of the gold trade. The precious metal surged to new records near $3,700 an ounce this week.
“So much for the historical correlations that underpin traditional asset allocation,” wrote Mohamed El-Erian, president of Queens’ College, Cambridge and adviser to Allianz.
So much for the historical correlations that underpin traditional asset allocation:
undefined Mohamed A. El-Erian (@elerianm) September 9, 2025
equities at record highs, gold setting another record (chart below), credit spreads at or near historic lows, and bonds back in 'bull market' territory (see prior post).#markets #investors… pic.twitter.com/c6TAD2nnfS
El-Erian was pointing to an unusual backdrop: stocks and gold both at all-time highs, credit spreads near historic lows, and bonds back in bull-market territory.
Economist Peter Schiff offered a more sobering interpretation, arguing that mainstream pundits “refuse to recognize that rising unemployment, swelling federal deficits, rate cuts, and a weakening dollar will lead to soaring inflation.” That, he says, is why more investors are piling into the yellow metal.
Rising nearly 39% year-to-date, Comex gold futures have eclipsed all other major asset classes in performance.
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