re: **unhedged** Gold heading towards $US500 an ounceSource:...

re: **unhedged** Gold heading towards $US500 an ounce
Source: PERTH AAP
Date: 2005-Nov-18 02:39 PM

Local gold miners are hitching a ride on the soaring gold price, which on Friday reached an 18-year high.

The price of gold surged past $US486 an ounce overnight, breaking the previous high set in late 1987.

The soft metal, which is seen as a safe haven in times of rising inflation, has been pushed higher by concerns about upward pressure on prices in the US and world economies.
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"One of the major reasons investors have held gold is as a hedge against inflation," said Fat Prophet senior resources analyst Gavin Wendt.

"Concerns have been around for a while now but I think people are starting to get a little more worried."

A decision by the Russian Central Bank to double its gold reserves and seek an additional 500 tonnes has also lifted investor sentiment around the metal.

In turn, investors are also pushing up Australian gold mining stocks, albeit on a selective basis.

Papua New Guinea miner Lihir Gold was the pick of the bunch because of its unhedged exposure to the gold price,Mr Wendt and Daiwa Securities analyst Mark Pervan said.

Shares in Lihir on Friday hit a record intraday high of $2.23, having risen steadily in recent weeks from $1.745 at the start of November.

Mr Wendt also likes Dominion Mining, which operates the Challenger mine in South Australia.

The junior company on Tuesday reported record production for October and it shares have lifted from a 61 cents at Monday's close to 76 cents.

Market leaders Newcrest was up 40 cents to $20.03 on Friday afternoon while Newmont had gained seven cents to $6.33. Emperor Mines rose eight more cents to 47.5 cents.

Meanwhile, analysts say the price of gold is set to go even higher and will likely crack $US500 an ounce mark before the end of the year.

Mr Pervan said the fundamentals of gold over the medium term were positive and would underpin its continued rise.

"What you see is a lot of heavy resistance moving up to that number but if it breaks through that threshold then it won't be bound by range and will move higher," he said.