Analysis of the Impact of the Decline in the U.S. Dollar's Reserve Status on Global Asset Allocation and Investment Strategies

Now I will provide you with a

analysis report:

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According to data disclosed by the International Monetary Fund (IMF),

, remaining below 60% for 11 consecutive quarters and hitting a 30-year low [1][2]. This data marks that the U.S. dollar’s status as the world’s dominant reserve currency is experiencing structural loosening.

From a historical perspective, the U.S. dollar’s reserve share has declined continuously from its

in 2001, dropping by more than 16 percentage points to date [1][3]. This trend reflects that the global monetary system is shifting from a “U.S. dollar-dominated” structure to a new balanced pattern of “U.S. dollar as the main currency, multi-polar coexistence, and gold as an anchor” [2].

The current global reserve system presents the following characteristics:

Reserve Asset	2025 Share	Trend
U.S. Dollar	56.92%	Sustained Decline
Euro	20.33%	Steady Growth
Japanese Yen	5.82%	Significant Growth
Chinese Yuan	1.93%	Slight Decline
Gold	~24%	Sustained Growth
Other Currencies	~20.82%	Diversification

• Euro
  , as the world’s second-largest reserve currency, maintains a stable status, with a share of 20.33% in Q3 2025 [2]
• Japanese Yen
  became the single currency with the most significant growth in the quarter, rising from 5.65% to 5.82% [2]
• Chinese Yuan
  has developed rapidly in international trade settlement, but its reserve share has slightly adjusted [1]
• Gold
  has for the first time exceeded U.S. Treasuries in its share of central banks’ foreign exchange reserves, becoming the world’s second-largest reserve asset [1][4]

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• The U.S. federal government debt has exceeded
  $38 trillion
  [1][2]
• High interest rates combined with high deficits have led to a rapid rise in U.S. fiscal interest expenses
• Market concerns over the sustainability of U.S. debt continue to spread

• The U.S. government frequently uses the U.S. dollar as a political tool, abusing its monetary power [1]
• Financial sanctions against Russia have made countries aware of the potential risks of over-reliance on the U.S. dollar system [1]
• The “Black 48 Hours” financial turmoil triggered by the 2025 “reciprocal tariff” policy completely shattered the U.S. dollar’s “safe-haven myth” [2]

• The Federal Reserve cut interest rates three times in 2025, lowering the federal funds rate target range to
  3.5%-3.75%
  in December [2]
• The interest rate advantage of the U.S. dollar relative to non-U.S. currencies has narrowed significantly
• Declining real interest rates have reduced the relative attractiveness of holding U.S. dollar assets

• The U.S. Dollar Index fell
  10.8%
  in the first half of 2025, marking its worst performance since 1973 [1]
• Policy uncertainty from trade frictions has risen to a historical high [5]
• Global economic recovery expectations are divergent, and non-U.S. currencies have strengthened relatively

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Traditional asset allocation models are undergoing fundamental restructuring:

• U.S. Treasuries: 35%
• Developed Market Equities: 30%
• Emerging Market Equities: 10%
• Gold: 5%

• U.S. Treasuries: 20% (15 percentage point decrease)
• Developed Market Equities: 25%
• Emerging Market Equities: 20% (10 percentage point increase)
• Gold: 15% (10 percentage point increase)

Gold became the best-performing global asset in 2025, with an

, setting a new historical record 50 times [4][6].

• The value of global official gold reserves has reached
  $3.93 trillion
  , officially surpassing the scale of overseas official holdings of U.S. Treasuries ($3.88 trillion) [4]
• This is the first time this has occurred since 1996
• Global central banks’ annual gold purchases exceeded 1,000 tons for three consecutive years from 2022 to 2024 [1]
• Global central banks’ net gold purchases reached
  634 tons
  in the first three quarters of 2025 [1]

1. Structural Demand from Central Banks
   : Central banks of various countries continue to increase gold holdings to diversify reserve risks [7][8]
2. Fiscal Concerns
   : U.S. debt expansion drives investors to seek alternatives to U.S. Treasuries [7]
3. De-Dollarization Trend
   : Gold, as a non-sovereign, credit-risk-free physical asset, has become the preferred choice [7]
4. Declining Real Interest Rates
   : Federal Reserve interest rate cuts have reduced the opportunity cost of holding gold [6]

Currency	Appreciation Against U.S. Dollar
Swedish Krona	+20.2%
Mexican Peso	+15.6%
South African Rand	+13.8%
Brazilian Real	+12.8%
Euro	+14%
British Pound	+7.68%
Swiss Franc	+12.76%

This phenomenon has driven the recovery of “carry trades”, where investors tend to borrow low-interest U.S. dollars to invest in high-yield emerging market currency assets [2].

The “Black 48 Hours” event in April 2025 is a milestone:

• S&P 500 Index plummeted
  10.53%
• VIX Volatility Index surged
• U.S. Dollar Index fell
  4.37%
  simultaneously
• Gold, Swiss Franc, and Japanese Yen became safe havens for capital

This is the first time in history that the U.S. dollar has lost its traditional safe-haven status during a crisis originating in the U.S. itself [2].

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• Increase the gold allocation ratio to
  10-15%
  of the investment portfolio [7]
• Gold has a low correlation (approximately -0.15) with equities and U.S. Treasuries, making it an effective risk diversification tool [7]
• As a physical asset, it can effectively preserve purchasing power and hedge against inflation risks

• Focus on entry opportunities brought by short-term technical corrections [7]
• Increase holdings of gold and silver mining stocks, which are currently undervalued relative to historical averages [7]
• Institutional gold price targets for 2026: UBS $4,800-$5,000, Goldman Sachs $4,900, JPMorgan Chase $5,055-$6,000 [9]

• Euro
  : The world’s second-largest reserve currency, with a stable share of 20.33% in 2025
• Japanese Yen
  : The currency with the most significant growth in the quarter, with its safe-haven attribute highlighted

• Currencies such as the Korean Won, Chinese Yuan, and Brazilian Real offer carry trade opportunities
• Currencies such as the Mexican Peso and South African Rand performed strongly in 2025

• Moderately reduce the allocation ratio from the traditional 35% to around 20%
• Control duration to
  5-7 years
  to cope with increased volatility in long-term bonds [3]

• High-credit sovereign bonds from countries such as South Korea and Singapore have become important tools for portfolio diversification [3]
• The de-dollarization trend and loose Asian policies create favorable conditions

• Moderately reduce the overweight ratio, emphasizing geographical diversification [3]
• Pay attention to valuation risks, as U.S. equities are currently at a historically high level

• Korea Composite Stock Price Index rose
  71.12%
  in 2025 [3]
• MSCI Vietnam Index rose
  61.08%
  in 2025 [3]
• Shenzhen Component Index rose
  28.02%
  , CSI 300 Index rose
  17.20%
  [3]

• On one end, deploy high-tech growth sectors to capture the upward profit potential driven by AI
• On the other end, deploy high-yield high-quality value stocks as a downside protection [3]

Asset Class	Allocation Recommendation	Rationale
Private Equity	Moderately Increase Allocation	Improve portfolio diversification
Hedge Funds	Focus on	Absolute return strategies to cope with volatility
Private Credit	Focus on	Opportunities in non-public markets
REITs	Hold	Relative value in a weak U.S. dollar environment
Commodities	Moderately Allocate	Hedge against inflation risks

Phase	Time	Core Strategy
Defensive Phase	2024-2025	Increase gold allocation to 10-15%, reduce U.S. Treasury holdings, increase exposure to non-U.S. dollar currencies
Transition Phase	2025-2026	Increase holdings of emerging market assets, focus on safe-haven currencies, hold U.S. dollars for hedging
Rebalancing Phase	2026-2027	Rebalance equity and bond allocations, increase holdings of Euro-denominated assets, focus on opportunities in the Chinese Yuan
New Normal Phase	2027+	Diversified allocation becomes the norm, maintain strategic allocation of gold

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1. Increased Volatility
   : The gold market experienced multiple rounds of sharp fluctuations in 2025, and the risk of short-term corrections cannot be ignored [6]
2. Geopolitical Risks
   : Trade frictions and sanction risks may trigger sharp market adjustments
3. Liquidity Risks
   : Unwinding of carry trades may trigger a stampede effect
4. Policy Risks
   : Uncertainty remains regarding the Federal Reserve’s policy path

: Expects gold price to reach $5,000 per ounce in the first three quarters of 2026 [9]

: Expects gold price to reach approximately by the end of 2026 [9]

: Expects gold price to rise to in Q4 2026, potentially further reaching $6,000 [9]

: The strategic value of gold will persist through 2026 and beyond, and short-term market adjustments may bring entry opportunities [7]

1. De-Dollarization Process Will Continue
   : Fiscal imbalances and geopolitical fragmentation are long-term trends [7]
2. Multipolar Monetary System
   : The U.S. dollar will remain dominant but its share will continue to decline, forming a “one superpower, multiple major powers” pattern [2]
3. Consolidation of Gold’s Strategic Status
   : Systematic gold purchases by central banks will become the new normal [8]
4. Restructuring of Investment Paradigm
   : Diversified allocation has shifted from an “option” to a “must-have” [7]

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The decline in the U.S. dollar’s reserve status is a

rather than a short-term cyclical fluctuation. This change is profoundly reshaping the global asset allocation landscape and investment paradigm.

1. Paradigm Shift in Allocation
   : Shift from focusing on single U.S. dollar assets to a diversified, dynamically balanced strategy
2. Revaluation of Gold’s Value
   : Upgrade from a safe-haven asset to a strategic reserve asset, with the allocation ratio increased to 10-15%
3. Regional Diversification
   : Reduce over-reliance on U.S. equities and U.S. Treasuries, increase holdings of Asia-Pacific emerging market and Euro-denominated assets
4. Currency Diversification
   : Increase exposure to non-U.S. dollar currencies, and utilize carry trades to capture interest spread gains
5. Rising Importance of Alternative Assets
   : Non-traditional assets such as private equity and hedge funds play an enhanced role in the portfolio

Investors should closely monitor changes in the U.S. dollar’s reserve share, global central bank gold purchase dynamics, and geopolitical developments. Adopt defensive strategies during the

, gradually adjust allocations during the , and ultimately achieve of the investment portfolio.

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[1] Shanghai Securities News - The Global Monetary System Accelerates toward Multipolarization (http://intl.ce.cn/sjjj/qy/202512/t20251223_2659071.shtml)

[2] Sina Finance - 2026 Forex Outlook: Interest Rate Cuts, Deficits, and the Twilight of the U.S. Dollar-Dominated Era (https://finance.sina.com.cn/money/bond/2026-01-05/doc-inhfezix2286668.shtml)

[3] 21st Century Business Herald - 2026 Global Market Outlook: AI Investment Momentum Continues, Gold Maintains Moderate Growth (https://www.21jingji.com/article/20251223/herald/bffd93fc01839dd9a97c4d9ff79b3ce3.html)

[4] Eastmoney - Central Banks Continue to Increase Holdings, Gold Surpasses U.S. Treasuries as the World’s Largest Reserve Asset (https://finance.eastmoney.com/a/202601113615115276.html)

[5] Visual Capitalist - The Rise of Major Currencies Against the U.S. Dollar in 2025 (https://www.visualcapitalist.com/rise-of-major-currencies-against-the-u-s-dollar-in-2025/)

[6] Securities Times - The “Story of Joys and Sorrows” of the Gold Frenzy (https://www.stcn.com/article/detail/3561116.html)

[7] Investing.com - Allianz Global Investors: The Strategic Value of Gold is Expected to Persist Through 2026 and Beyond (https://cn.investing.com/news/stock-market-news/article-3141683)

[8] 21st Century Business Herald - China’s Foreign Exchange Reserves Have Remained Above $3.3 Trillion for Five Consecutive Months (https://www.21jingji.com/article/20260107/herald/dcff5d3f8c23895a9f49862552d7dd76.html)

[9] People’s Daily Online - Multiple Institutions Expect U.S. Dollar Assets’ Attractiveness to Weaken and Gold Prices to Continue Rising in 2026 (https://world.people.com.cn/n1/2025/1225/c1002-40632195.html)