With Australian housing values being stagnant or in a slight decline since GFC 2008, this has created some opportunities for experienced investors to buy bargains with the hope to sell when the market picks up again.
QLD, Australia (PRWEB) June 18, 2013
P&A International, a top sheet metal fabricator and PCB supplier, has just posted a new article to its website that looks at the ways some business people have been able to make money in Australia during the current financial crisis.
As the in-depth and interesting article on the sheet metal fabrication website noted, Australian House prices, Gold and AUD/USD exchange rate have contributed to the wealth of savvy investors.
When GFC hit Australia back in 2008, many predictions were made about where the economy was heading. While some got it right, the vast majority was wrong. As the new article on the PCB supplier website said, it is hard to predict future developments when there are so many variables influencing the market at any given point in time.
For example, the article said, take the iconic metal fabricator Australian Sheet Metal Fabrication Company BlueScope Steel. How many people could see this business drastically downsizing and sending shock waves throughout the local economy? Or how about FORD closing manufacturing plants in Australia by 2016?
What is important to the investor is not what the future holds, the article by the aluminium PCB company noted, as it cannot be accurately forecasted, but instead what trends are now evident with high degree of certainty. One trend is now clear: the Australian economy is in a downward spiral. This brings major challenges and opportunities.
The article went on to examine few opportunities pertaining to this trend. For example, it noted that looking at USD/AUD exchange rate now, there has been a dramatic loss of value of the Australian dollar versus American currency. This can be explored not just by traders, but by any person going to the currency exchange and purchasing a USD $100 bill.
Speculating on the expectation that the fall of AUD will continue during the next 12-24 months, the article said that people can make gains of 10 to 40 percent, assuming that AUD/USD will come back to the previously more customised levels of 0.6 (AUD$1 buys USD$0.6).
Another option the article on the P&A International website described is tied to the exchange rate and price of Gold. As Gold and Silver is purchased and sold at international prices, their values can greatly fluctuate when measured in AUD currency. Even if the price of gold stays stagnant on the international market, Australia has a falling AUD, which will cause an increase in the price of gold in Australia due to the devaluing Australian Dollar.
The challenge here, the article said, is that there are not one, but two variables now: the fluctuating price of gold and AUD/USD exchange rate. This can amplify the gains made as well as losses. Considering the recent falls in the AUD value and likely stagnant price of gold in the next 12 months, money can be made by purchasing physical gold and selling it later for a profit.
House Prices are even more complicated, the article noted. Influenced by many factors such as supply/demand, government regulations and investors shifting capital, this asset class is highly unpredictable. This is especially so due to the latest government interventions via First Home Buyer Grant and Interest Rates. Another factor to consider is the high costs to convert it back to cash (cost to sell). With Australian housing values being stagnant or in a slight decline since GFC 2008, this has created some opportunities for experienced investors to buy bargains with the hope to sell when the market picks up again.
The drawback of this strategy is a high holding cost as the majority of investors borrow the funds, and this makes this investment negatively geared. It will be much easier for a small investor to purchase some small amount of USD currency or Gold than to come up with $600K to purchase a house in Sydney.
About P&A International:
P&A International is a PCB supplier with extensive clientele across the Globe. Providing high tech solutions like aluminium PCB since 2001, company have grown dramatically to become a landmark on the map of quality suppliers from China. For more information, please visit http://www.pa-international.com/products/metal-fabrication-china