Stepping on gas to safeguard future

GOVERNMENTS issue licences and collect rent from big corporations that extract our resources and send them overseas.

This is not new, and neither is the knowledge that Australians have been paying more for gas than we should.

So why does the Government seem so concerned about how much we pay now? You may be like me, thinking about the stupidity of a system that has allowed this to continue.

The way licences are controlled varies from state to state. So federal regulation is required over Australian resources, so licences properly protect Australia’s interests.

The Government has had to refer to the Customs Act 1901 to ensure our gas supply by placing sanctions against gas exporters.

Now, we don’t always listen to our governments, but they know they’ll get our attention if the topic impacts on our back pocket.

So it’s not what we pay now for gas that they’re worried about, it’s what happens if the conflict worsens.

For investors, there are concerns about what this may mean for your shares.

In my experience, when a conflict breaks out, there is an initial reaction on the market but then the overall rise strengthens and we often see new all-time highs follow. This month, the strong positive for Aussie shares is how the All Ordinaries Index (XAO) finally broke through the level of the 2015 high of 5963.5 points to achieve 5983 points, before falling away slightly last week.

It was possible for the fall last week to spill over into this week, however, the market is holding steady just below that 2015 high.

It is exciting to finally see the market trade to a two-year high as this aligns with my longer-term view that the bulls are still in control.

However, it is preferable to now see the market pull back for two to four weeks to provide support for a solid rise in the second half of 2017.

There’s been a flow of money into solid dividendpaying stocks in recent weeks, while the miners take a breather. That said, big stocks in mining and energy will be important to watch in the second half of the year. DALE GILLHAM IS CHIEF ANALYST AT WEALTH WITHIN