Bullion price rise shows no sign of stopping

Since then the local price has surged to more than $1750 an ounce, thanks to the surge in US dollar prices to all-time highs and the retreat in the local unit to near parity with the greenback.

Mr Beament, the managing director of Western Australian gold producer Northern Star, would now consider buying a crate of bubbly, if he were not so busy.

Northern Star produces 75,000 ounces of gold annually from its already highly profitable Paulsens mine. For budget planning purposes, Mr Beament has been using $1400 an ounce gold. Should the local gold price hold at these record levels, Northern Star would pull in $26 million annually in cash surplus to budget expectations, all for the same amount of work.

"That's gobsmacking," Mr Beament said yesterday, given it was based on a one-week rise in the gold price alone. "We've got a window of opportunity now with the money and confidence to push to an annual production rate of 100,000 ounces."

It is a story being repeated across the industry. Based on industry production of about 9 million ounces annually, the $250-an-ounce price increase in the past week would represent an annual revenue boost of $2.25 billion.

Gold's climb on its haven status is also giving Matthew Gill, managing director of Castlemaine Goldfields (CGT), reason to smile.

CGT is in the early stages of reviving the Ballarat gold project in Victoria, picked up for a song last year after Lihir Gold (now part of Newcrest) failed to reach its big-time ambitions there despite spending $750 million.

Mr Gill has more modest ambitions for Ballarat as a 50,000 ounce-a-year producer, with feasibility study work based on $1100 an ounce gold and operating costs of $710 to $750 an ounce. Now that gold is $1750, there is potentially an additional $32 million in annual free operating cash flow to come the group's way over and above what it had planned.

It also means jobs at the mine are more secure.

Since acquiring the mothballed mine in May last year, CGT has been rebuilding the workforce. By the end of this year, 190 jobs will be created.

Mr Gill said that in all honesty, he had no idea where the gold price was headed. But others were prepared to take a stab yesterday, notably JPMorgan which lifted its $US1800-an-ounce year-end target to $US2500 an ounce or higher.