What happens when consumer demand drops off a cliff as it has over the last quarter? Shipments of goods and raw materials will likely follow. How are those shipments measured? Let’s check in on trends and developments within the Baltic Dry Index.
The Financial Times highlights the fact that the BDI is submerging precipitously and writes today:
…worrying signals about the global recovery remained. The Baltic Dry Index, a gauge of dry bulk commodity shipping costs seen by many as a leading indicator for growth, fell for a 29th successive session to its lowest level for more than a year.
Here is a chart of the BDI relative to gold over the last 18 months:
That recent submersion of the BDI is clearly sending a strong signal as to the grinding halt of the global economy.
Can you spell disinflation if not outright deflation? Start with BDI and go from there. In fact, given these developments in the BDI, I would expect that gold may have further downside from current levels.