From Wikipedia:
The Baltic Dry Index (BDI) is a number (in USD) issued daily by the London-based Baltic Exchange. Not restricted to Baltic Sea
countries, the index provides "an assessment of the price of moving the
major raw materials by sea. Taking in 23 shipping routes measured on a
time charter basis, the index covers Handysize, Supramax, Panamax, and Capesize dry bulk carriers carrying a range of commodities including coal, iron ore and grain."
Every working day, a panel of international ship brokers submits their
view of current freight cost on various routes to the Baltic Exchange.
The routes are meant to be representative, i.e. large enough in volume
to matter for the overall market.
These rate assessments are then weighted together to create both the overall BDI and the size specific Supramax, Panamax, and Capesize indices. The BDI factors in the four different sizes of oceangoing dry bulk transport vessels.
The Baltic Dry Index directly measures the demand for shipping capacity versus the supply of dry bulk carriers. The demand for shipping varies with the amount of cargo that is being traded or moved in various markets (supply and demand). Indirectly, the Baltic Dry Index measures global supply and demand for the commodities shipped aboard dry bulk carriers, such as building materials, coal, metallic ores, and grains.
Here is the latest chart:
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| Baltic Dry Index Chart (courtesy ZeroHedge.com) |
In the latest daily report, the Baltic Dry Index fell to 522, a new all-time low. While equities markets around the globe are posting record high prices, actual economic activity seems to point to a serious global recession on the near-term horizon.
In my last posting here dated January 20, 2015, with Gold trading near $1300.00/oz and Silver trading near $18.00/oz, I suggested that Gold was no longer "the most hated asset class" and, as such, I recommended liquidating precious metals related investments. The XAU Gold/Silver Mining Index was up 20% YTD at that time. Since then, gold and silver prices have retreated significantly, and most precious metals mining shares are down between 10% and 40% from their mid-January intra-day highs. Gold traded down to $1,215.00/oz recently and Silver plunged as low at $16.55/oz.
Today, Gold is trading near $1230.00/oz and Silver is trading near $17.30/oz.
In mid-January, my computer trading system alerted me to this potential correction in Gold and Silver mining shares. However, despite the recent actual correction, there are no new buy signals from my system in this group that would suggest any meaningful re-accumulation of these shares is warranted. Unfortunately, perhaps, we don't always listen to our systems. Late Friday, February 13th, I began re-establishing selected gold mining shares that having been particularly beaten down during these last 4 weeks. I also established a small short position in the S&P 500 Index as a hedge against my long gold mining shares (on a ratio of $8 short for every $1 long).
Except for the fact that most of my U.S. stock market gauges are now in "overbought" territory, my computer trading system has yet to signal a sell signal in any major index. While not following a "tried and true" system can sometimes be hazardous to your pocketbook, sometimes it is necessary to initiate a small position where you think the next big trade will be, in order to better connect to real live market forces.
