Gold futures have dropped below $1,600 an ounce. Consequently, the bullion is now over four times the Gold Bugs ratio, the highest in 12 years.

Gold stock traders have preferred miners over bullion, arguing that stocks carry intrinsic value through capital appreciation, dividends, good management and potentially higher returns exceeding cost of capital.

On the flip side, gold producers have experienced underestimated cost overruns, higher production costs, over concentration on boosting output to chase rising bullion prices, costly mergers & acquisitions and labor unrest, which have all weighed on gold stocks.

Meanwhile, gold has outperformed because investors sought out bullion as a safe-haven asset on greater quantitative easing, higher inflation expectations, recurring volatility, Eurozone woes and periodic U.S. budget delays.

However, gold has recently seen its 55-day moving average drop below its 200-day moving average, back-to-back quarterly declines – the first time since 2000 and prices below 100-day averages – the first time since 2008.

Other gold miner ETF performances over the past year include:

  • Market Vectors Junior Gold Miners (NYSEArca: GDXJ): down 41.1%
  • PowerShares Global Gold and Precious Metals Portfolio (NYSEArca: PSAU): down 30.1%
  • MSCI Global Gold Miners Fund (NYSEArca: RING): down 34.1%
  • Global X Pure Gold Miners ETF (NYSEArca: GGGG): down 39.1%

Market Vectors Gold Miners ETF

For more information on gold stocks, visit our gold miners category.

Max Chen contributed to this article.

Full disclosure: Tom Lydon’s clients own GDX.