The USD Exodus: How Ultra-HNW Investors Are Reallocating to Gold, Crypto, and China in 2025

The geopolitical landscape is reshaping global finance, and ultra-high-net-worth (HNW) investors are leading the charge. With the U.S. dollar at its largest underweight position in nearly two decades, a seismic shift is underway as wealthy clients of UBS pivot toward gold, cryptocurrencies, and Chinese markets. This move isn't merely tactical—it's a strategic reallocation to hedge against volatility, geopolitical risk, and the declining dominance of the USD.

The Geopolitical Catalyst: Why the Shift?

The U.S.-China tariff truce of May 2024—reducing U.S. tariffs on Chinese goods from 145% to 30% and Chinese tariffs on U.S. goods from 125% to 10%—has reignited investor optimism in China. Meanwhile, persistent market volatility and geopolitical tensions have eroded faith in traditional USD-centric assets. UBS's co-head of wealth management in Asia, Amy Lo, notes that clients are now prioritizing risk mitigation over growth, seeking assets unshackled from U.S. monetary policy.

Gold: The New "Safe Haven"

Gold has surged as a cornerstone of diversification. With central banks globally eyeing it as a reserve asset, UBS clients are leveraging its stability. Key advantages:
- Non-sovereign: Gold's value isn't tied to any government's fiscal health.
- Inverse correlation to USD: As the dollar weakens, gold often gains.
- Institutional validation: BlackRock and Galaxy Digital analysts highlight its role in modern portfolios.

Risk: Gold's returns are historically modest, but its volatility is far lower than equities or crypto.

Crypto: The Digital Hedge

Cryptocurrencies, particularly Bitcoin, are no longer niche. UBS clients are allocating portions of their portfolios to digital assets, buoyed by institutional adoption and ETFs. Why now?
- Store of value: Bitcoin's market cap exceeds $1 trillion, rivaling traditional assets.
- Dollar alternatives: Proponents like Galaxy's John Deaton argue crypto exposure is now less risky to exclude than to ignore.

Risk: Regulatory crackdowns and market swings (e.g., 2022's -65% BTC drop) remain concerns.

China: The Undervalued Growth Engine

After years of sidelining China, U.S. and European HNW investors are returning. The Hang Seng Index's 2024 surge—up 22%—reflects optimism in tech, AI, and infrastructure. Key drivers:
- Tariff truce: Reduced trade barriers boost cross-border investments.
- Policy reforms: China's push for innovation (e.g., AI collaborations like AMD's $10B deal with Saudi Arabia's Humain) signals long-term growth.

Risk: Geopolitical flare-ups or regulatory overreach could reverse momentum.

Actionable Strategies for Investors

To mirror UBS's clients, adopt a 40-40-15-5 portfolio split:
1. 40% Fixed Income: High-grade bonds or U.S. Treasuries to anchor stability.
2. 40% Equities: Focus on quality names in China's tech sector (e.g., Alibaba [BABA]) or global AI leaders.
3. 15% Alternatives:
- Gold: Buy GLD or physical gold via ETFs.
- Crypto: Start with Bitcoin (BTC-USD) or regulated ETFs like GBTC.
4. 5% Cash/Emergency Reserves: Maintain flexibility amid volatility.

The Post-Dollar Era: Act Now or Pay Later

The writing is on the wall: The U.S. dollar's reign is waning. With global investors underweighting USD assets and overweighting alternatives, the window to capitalize is narrowing. The risks of ignoring this shift—whether through missed gains in gold, crypto, or China—are profound.

Investors must act decisively. Diversify, but do so strategically. The era of “all-in on the dollar” is over.

Final Call to Action: Allocate 5–10% of your portfolio to gold and crypto now, and explore China via ETFs like MCHI. The geopolitical pivot is real—and so are the returns.