Gold must be heated to its molten state to form bullion, but the flames from one miner's kiln appear to have spread to its share price.

Shares of pan-African gold miner Randgold Resources (NASDAQ:GOLD) have not merely outperformed the competition, they've crushed it like ore through a ball mill. Over the past one-year, two-year, and five-year periods, Randgold consistently comes out on top. From titans like Newmont Mining (NYSE:NEM) and Goldcorp (NYSE:GG), to quality intermediate producers Agnico-Eagle Mines and Yamana Gold (NYSE:AUY), they all are staring at Randgold's burning coattails over those periods. Indeed, over the past five years, Randgold shares have outperformed the Market Vectors Gold Miners ETF (AMEX:GDX) by a full 200%!

With quarterly earnings out this week, though, Fools are reminded to leave past performance in the past and focus on the road ahead. Randgold is certainly a money-maker (pun intended?), recording a 56% increase in free cash flow and a 10% boost to revenue thanks to an impressive 23% increase in gold production from the company's flagship Loulo mine complex in Mali. Profit attributable to shareholders, however, slipped 17% from the prior year period to $14.7 million, highlighting a pair of red flags that Fools are advised to keep in "mined" (see what I did there?).

Toxic soup in the molten pot
Randgold shares may be leading the pack, but in retaining a substantial hedge book of forward gold sales at excruciatingly low prices, Randgold joins Barrick Gold (NYSE:ABX) back behind the curve. Recognizing a multi-year bull market for precious metals, most producers moved briskly to eliminate gold hedges, but Randgold remains on the hook for more than 79,000 ounces of future production through 2010 at an average sales price of $466 per ounce. That represents 9% of total production anticipated for the period, at a price below the latest production cost of $477 per ounce. Maturing hedges struck an $11.5 million blow to the bottom line during the second quarter.

The other balance sheet item of note is Randgold's exposure to auction rate securities. ARS paper remains impossible to value because no functioning market for them exists. The original $49 million "investment" is now estimated to be worth $33.6 million using that fanciful "mark-to-model" method, and an additional $5 million has been set aside in 2009 to absorb anticipated losses. I expect further loss provisions to impact profits going forward.

From the company's exciting mine development pipeline, to a promising acquisition that's pending, fuel for Randgold's fire remains plentiful. I simply want to ensure that investors enter the fire with eyes wide open.

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Gold is a hot topic on the blogs at Motley Fool CAPS. Join the free service today and see just how many Fools are taking the long view when it comes to investing in gold. The "Gold" tag at CAPS lists 41 companies, and you'll find Christopher's comments on most of them.

Fool contributor Christopher Barker sees a pot at the end of the rainbow for investors who obtain exposure to gold. He can be found blogging actively and acting Foolishly within the CAPS community under the username TMFSinchiruna. He tweets. He owns shares of Agnico-Eagle Mines and Yamana Gold. The Motley Fool has a gilded disclosure policy.