we make more money than we know what to do wit

http://www.reuters.com/article/reutersEdge/idUSTRE5871IS20090908

SYDNEY (Reuters) - Further gains in gold prices, which topped $1,000 on Tuesday for the first time in six months, could unleash a flood of new supplies from mining companies, Australian gold miner Focus Minerals (FML.AX) said.

The surge also whetted appetite for gold mining stocks, driving up shares in Australia's biggest gold miner, Newcrest Mining Ltd (NCM.AX) by 4 percent, and the stock of Lihir Gold (LGL.AX) by 3 percent, or weekly gains of 14 percent and 12 percent respectively.

"You can see a surge in gold all over the world coming out of the ground, which would just be overwhelming and very quickly bring the gold price crashing down," Focus Managing Director Campbell Baird told Reuters.

"Most companies are comfortable operating in the $900-$1,000 an ounce range, there's a good margin there of $200 to $300 per ounce," he said.

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

In a client note, Credit Suisse said its expected the price of gold to continue to rise through September and October.

Focus is looking to double its own production to 80,000 ounces in 2010 and 100,000 in 2011 as it exploits new mines in Western Australia state.

With gold ranging between $1,000 and $1,500 an ounce, Baird said, "We make more money than we know what to do with."

He added, "We'd hope prices like that wouldn't drive mad speculative investment (in new mines), which it certainly might do."

Australian miners are already producing more bullion, industry figures show.

Australia produced 57 tonnes of gold in the second quarter, 2 tonnes more than the previous quarter, signaling a resurgence in the country's gold mining sector, say consultants Surbiton Associates Pty Ltd.

Australian and South African gold output was about the same, ranking them third among gold producing countries, behind China and the United States.

Baird said a rising bullion price also threatens to limit sales of jewelry, a declining key driver in annual world gold consumption.

"At say, $1,500 an ounce, a lot of people will simply stop buying jewelry," Baird said.

Jewelry accounted for 43 percent of world demand for gold in the first half of 2009 versus 63 percent in the previous first half according to the World Gold Council.

(Editing by Clarence Fernandez)