BUY OR SELL-Aussie gold miners shine as gold tops $1,000

* Wrong stage of gold price cycle

* Investors have to be selective, look at fundamentals

* Gold stocks missed broader market's 40 pct rally, may rise (For more on Reuters BUY or SELL stories click [BUYSELL]

By Victoria Thieberger

MELBOURNE, Sept 8 (Reuters) - Australia's gold mining stocks rose further on Tuesday in a week-long rally, as investors piled in to take advantage of exposure to the surge in the gold price.

Spot gold XAU= and U.S. gold futures GCZ9 hit a six-month high of $1,000 on Tuesday, as worries about the sustainability of the global economic recovery underpinned sentiment [GOL/]

That helped to lift Newcrest Mining Ltd (NCM.AX), Australia's biggest gold miner, by 4.0 percent and Lihir Gold (LGL.AX) by 3.0 percent, taking their gains for the past week to 14 percent and 12 percent respectively.

So is it a good time to be buying Australia's gold producers?

ALL PLAYED OUT

Whether gold stocks have further to run depends crucially on if analysts believe the gold price will move past $1000 and stay there or merely peek over the top before slipping. [ID:nSP98361] "I think it's the wrong stage in the cycle to be looking at gold as a sector, given that the factors that were helping to drive it were concerns over the financial markets and market stability, concerns over the U.S. dollar -- those have largely played out," said Ausbil Dexia portfolio manager Adam Dixon.

He said despite current jitters about the path of equities in the traditionally weak months of September and October, risk aversion has still fallen significantly this year and fears of future inflation were also overdone.

Constellation Capital Management portfolio manager Peter Chilton, who does not hold any gold stocks, said investors would have to be highly selective.

"We haven't found any that represent value. Don't get carried away just because it's a gold stock and gold is moving.

"You've got to look at the fundamentals like company management and reserve life, unless you had a special reason to believe the gold price was going way above current levels," Chilton said.

Analysts at RBS on Tuesday downgraded their call on Lihir to hold, saying its growth plans appeared to carry considerable risk.

One factor hampering the local producers is the surging Australian dollar, which is hovering near a one-year high and erodes the benefit of the rise in the U.S. dollar gold price.

Another issue for fund managers is that the vast majority of the 25 gold miners in Australia are small and have a market value of less than A$1 billion, making it extremely difficult for most fund managers to invest in them because of liquidity concerns.

A star performer of the past week, St Barbara Mines (SBM.AX) whose stocks surged 20 percent on Sept 3, has a market capitalisation of A$455 million. PLAYING CATCH-UP

Gold stocks missed out on much of the broader Australian market's 40 percent rally since March .AXJO, with Newcrest's latest rise only returning the share price to early June levels when gold last had a tilt at $1,000.

That suggests there is room for further catch-up, says Pengana Capital portfolio manager Tim Schroeders with A$5.7 billion under management.

"People have been underinvested and that has probably led investors to rebalance portfolios and allocate a higher proportion to gold stocks," he said.

He placed more faith in investors' latest bout of nerves about the strength of global recovery, which could spell renewed weakness for equities and a search for safe haven assets.

"Given the strong appreciation in bonds and in equities over the past six months, it makes sense that gold will become an increasingly favoured alternative asset." (Editing by Valerie Lee)