Gold, Commodities Divergence Against Baltic Dry Index Trend

Apt comments on a strange divergence between the Baltic Dry Index (global shipping) and commodities -- the former has crashed while the latter has rallied over the last 6-9 months. Stills says of this:

I really don’t have a decent explanation for this phenomena but I do believe that the BDI is an accurate reflection of demand. Therefore I have to wonder if the commodities market isn’t pricing in some sort of severe supply shortage. The other explanation is that the commodities market is pricing in inflation while the BDI is pricing in deflation.

He then later says:

... I know that bad weather is affecting sugar and coffee throughout Latin America while a large section of Australia (equal to the size of France and Germany) is under water. Is that the reason? I don’t know but it certainly bears watching and I would be very careful about loading up on commodities thinking that a new bull market is about to erupt.

So there is some evidence of a further universal market crash (or what some would inaccurately call "deflation") in the cards. It is a bit against my typical editorial bent to run "deflationist" materials, but Stills makes some good points here that cannot be ignored.