The Baltic Dry Index continues to break down, and is preparing to take out it’s all time low set in early 2009 in the aftermath of the Lehman Brothers/financial collapse. Making matters worse today, the BDI is collapsing in the midst of what is typically the strongest shipping season of the year.
As the BDI prepares to take out 666 to the downside, how low might the global shipping index be by March 2013? 400? 300? Hopefully unlike official interest rates, we will at least be able to avoid a negative print.
The 2 year BDI chart vs. gold showing an even greater collapse when priced in real, tangible wealth:
And the 10 year BDI/gold chart:
Charts courtesyInvestmentTools.com
A breakdown of the BDI to new record setting lows appears imminent.
![[Most Recent Quotes from www.kitco.com]](http://www.kitconet.com/images/live/s_silv.gif)
![[Most Recent Quotes from www.kitco.com]](http://www.kitconet.com/images/live/s_gold.gif)
If one were looking at price alone one might see such a scenario play out. But when considering MACD on a weekly chart there has been significant divergence in both Q1 2012 vs Q1 2011 as well as currently vs Q1 2012. And all of these divergences are massive compared to the 2008 low. This might be more indicative of a triple bottom forming rather than imminent lows.
Looks like Blythe and company are hammering silver today.
The BDI is an interesting chart that reflects the retched situation with shipping. German is responsible for 40% of shipping worldwide and has 600 shipping firms, 100 of which filed bankruptcy recently. Many of the others are at a tipping point of insolvency. The Greek shipping magnates are buying bottoms for pennies on the dollar, waiting for the rebound.
The roads offshore from Indonesian, Taiwan and China are filled with empty Capemax and Supermax ships sitting idle, not even being use for oil storage. And it will only get worse as China is seeing its manufacturing moribund, stagnant and channel stuffed with inventory that is not moving while Euro/China trade drops like a rock by low double digits.
Look at the bright side. We still have the printing press. That can make everything A/OK!
And this is with the Christmas shopping season approaching. Where are the cargo loads of cheap Chinese junk for WalMart and the like?
I really don’t like seeing those numbers continue to slide like that. Not only does it spell trouble for industrial output/activity but there is also the human side of it all. Those numbers mean layoffs and difficult times ahead for those employees. Winter is coming on in the N. Hemisphere. All talk of global warming aside, WINTER ALWAYS COMES!! Housing, heating bills… More hard times for more people. More lives wrecked.
AGXIIK, you’d pointed out that “The Greek shipping magnates are buying bottoms for pennies on the dollar, waiting for the rebound.”
But, with the world’s currency system in collapse, their ‘roll of the dice’ is conditioned on whether reversion to specie (voluntary or forced) will result in prior trade levels, or not. Given that a prime reason for infusion of credit-’money’ is to impel artificial ‘demand’ that can’t ultimately be sustained under rational limitations (causing ‘mal-investments’ so often illustrated by ‘Austrians’), then they’re bound to lose in their gambit, because that excess activity simply won’t be structurally revivable as a ‘real-life’ supply-demand.matrix seeks rational equilibration.
This process toward stasis will be replicated across the board in myriad business sectors until it settles out. The world of the ‘elites’ will become a hell of uncertainty until they revise their analytical tools on bases of physical reality from that of ‘QE’.
Pat I was wondering about that too. These ships are not like buying a dozen 2 br homes on the speculation that the RE market might pop in 5 years. The homes can be rented. Maybe the tankers can be used for petroleum storage while the Greek owners wait for a return to some sort of normalcy in the market. If they can be bought cheaply this would depress the market and draw down the value of the working ships. If these experienced Greeks see the ships as floating assets they may also be trying to convert their Euros and dollars into something that will have greater future value, like stacking silver and gold. The problem with these ships is they cost a bit to maintain.
The Baltic Dry Index might be collapsing right now but they still have a chance for Christmas where a lot of people will be shipping gifts to others or ordering stuff online. Anyway, if the BDI keeps going down, it’ll hurt the economy since a lot of countries will have problems with shipping.
Sumkid most internet and Christmas shopping shipments are Fedex, USPS or UPS The the exports from China to other countries like the US, Australia, the Euro zone and the like is dropping by low double digits. The BDI measures the extent of activity by very large carriers that transport dry good commodities like wheat, corn, iron, coal and other massive amounts of stuff. I would not hold out hope that the DBI will be affected by Christmas shopping on line, as much as I would like to contribute to those sales.