Gold’s runnin’. And folks are chasin’ it.

Bullion was on track for a sixth gain in seven weeks Friday, having minted new records above $2,750.

Explanations for the rally vary. I talked at some length about gold earlier this week. I’ll confess to being mostly disinterested. For me, gold’s something you have in your portfolio because you have to. It can be a decent hedge. Or not. It can be uncorrelated. Or not. Allocate 5% or 10% to it and forget it. (Not investment advice. Consult a local financial advisor. You can find one wedged between Ulta and a nail shop at your nearest strip mall.)

What does interest me about this gold rally is the ongoing disconnect with US reals. The normally reliable relationship between the two has broken down entirely. That’s notable and it keeps me at least marginally engaged with the narrative around gold’s most recent record run.

If you ask Mohamed El-Erian, it’s about de-dollarization. Gold’s relationship to the dollar and rates “has broken down,” he told Bloomberg, while musing about “the slow diversification away from the dollar” in global CB reserves and a shift “away from the dollar payment system.” Note from the figure below that the dollar’s share of transactions, finance and payments far outstrips America’s economic clout, which is formidable in its own right. That’s a testament to dollar dominance.

For that reason (and plenty of others), I have a difficult time countenancing the de-dollarization narrative. When push comes to shove, people want USD cash. Just ask March of 2020.

Is there a glacial move away from the dollar? Sure. Certainly in reserves, and maybe in trade invoicing and payments too, but if the dollar’s so passé and nobody wants it anyway, then what’s with all the whining from countries and people who get pimp-slapped by OFAC? If the US no longer matters and the dollar’s no good, then what’s so vexing about Treasury sanctions? Just ignore them and invoice everything in “BRICS coin” or yuan.

Coming back to gold, BofA’s Michael Hartnett noted that it’s now pushing up near record highs relative to non-US shares. The figure on the left, below, is some manner of ratio between bullion and MSCI’s gauge of global equities ex-US.

The chart on the right is just weekly flows to gold funds. Last week’s influx — a little over $3 billion — was the largest in over four years.

“Investors are starting to chase,” Hartnett wrote, calling gold the conviction hedge against inflation and populism.