Gold over $1000 (R 7895) an ounce is not all good news for the industry because it is causing jewellers to become thrifty.
Jewellery gold consumption last year was about 2427 tons, a 23percent decline from 1998.
Philip Klapwijk, chairman of gold market research firm GFMS, expects worldwide gold supply to remain level despite declining output from South Africa.
Klapwijk presented GFMS' latest annual survey in Johannesburg last week.
Last year GFMS controversially claimed that China had overtaken South Africa as the world's biggest gold producer.
"China is admittedly an opaque market," Klapwijk said. But we are pretty sure of our data because we look at the few refineries in the region.
"And these show that China is producing more gold now than South Africa."
The gold price has soared on the US sub-prime crisis with high-net investors buying it as a safe haven for their nest eggs.
Klapwijk expects that more "skeletons in banks' closets" will keep the gold price high for another two years, but it will inevitably decline to around $600 an ounce again.
One reason is that current high prices have made gold jewellery unaffordable, and jewellery remains gold's primary market.
According to GFMS' research, more than half the 161000 tons of gold which has been mined has been turned into jewellery.