Australia’s miracle economy is fast diminishing, the recovery of the USD in comparison is a glimpse into the state of country’s current economic situation. China has been indirectly supporting Australias economy since the GFC with iron ore supply from the main two mining companies down under. Little else in the Australian economy is growing, and while most business is making ends meet, it would only take a slight change in policy from China to drop the AUD into direct free-fall.

Australia experienced an avoidance of the GFC mainly due to their stimulus, passed under the previous Rudd government. In this case, while still bailing out manufacturing, the government also supplied each tax payer and student with $700 AUD as a ‘direct’ stimulus. Other countries did not follow this trend, however it appeared to have eased Australians problems for the time being, albeit with a large government debt to recover for future generations.

Repaying the debt has been an issue in Australia, while many people still believe the housing market will never crash, and many more do not even realise the extent of Chinas contributions to the economy, Australia remains in grey territory, slipping further into the black as days go past. Major industry such as automotive manufacturing have all left in wake of not receiving enough government benefits to sustain them, although even if the government had continued to bail them out (a common trend in Australia), it is likely the big 3 manufacturers remaining would have still exited the market by the end of the decade.

The fact is, private debt far surpasses GDP in Australia, with the current figure at close to 150% of GDP. This is something that is never mentioned and not well known to the general population, government debt is also growing at a rapid rate, with a current 40% of GDP. While many people expected the recent change of government to support the reduction of government debt, it has still been slowly increasing, with reduction measures being for the most part, short sighted or non existant.

Australians however still pour a fortune into the second-hand housing market, with low interest rates fuelling the flame, and Chinese investors snapping up almost all new housing projects. This is clearly a trend that cannot continue, with the debt individuals incur for the average house price running around $750,000 AUD. Many are estimating the total will surpass $1 million in the next 10 years, for a country of mostly service providers and blue collars, it’s difficult to see how this trend can sustain for the long term.

Australia is heading for a hangover, the question is will the public realise in time? While precious metal purchases in Australia rallied for many years, the drop in the global gold and silver price has almost put an end to the rush to buy physical gold and silver. With the majority of investors looking at short term profits instead of long term security, and turning back from precious metals towards housing once more, Australia’s economy is full of wishful thinking and little substance.

Reinvestment in Gold and Silver for the long term in Australia is an option many people will hopefully turn to or rediscover, as it may be the only way people will sustain their current wealth when the ‘pass the parcel’ of housing purchases, and almost sole Chinese iron ore supply, inevitably comes to an end.