Proving that gold miners and the corresponding ETFs are still dangerous territory for long side investors, shares of the Market Vectors Gold Miners ETF (NYSEArca: GDX) are lower by 0.6% Monday while the SPDR Gold Shares (NYSEArca: GLD), backed by physical gold, is up more than 1%.

Rising gold futures and declining share prices for miners is nothing new. Investors dealt with that scenario more often than they would care to remember during gold’s unprecedented 12-year bull run that saw GLD become the second-largest ETF in the world by assets. GLD has since given up the second spot, but it may be the miners that are in for even more pain. [Mining ETFs Can Fall Further]

On the heels of a spate of analyst downgrades, negative earnings revisions and price target reductions, Citigroup says a combination of rising unit costs (15% yoy), sustained high capital budgets and a falling gold price have resulted in a fast contraction in margins – so much that no gold company under our coverage will generate Free Cash Flow at spot gold,” according to Zerohedge.

A look at this chart shows plenty of gold miners, including some of GDX’s largest constituents, are losing money mining for gold with the yellow metal’s spot price below $1,300 an ounce. The chart indicates that the all-in costs of production for companies such as Goldcorp (NYSE: GG), Barrick (NYSE: ABX), Newmont Mining (NYSE: NEM) and Yamana Gold (NYSE: AUY) are around $1,400 to just above $1,600 an ounce. Said another way, if it costs Barrick $1,600 to one ounce of gold out of the ground and gold is trading at $1,300 an ounce, the company loses money. It is that simple. [Chart of the Day: Gold Miners]

Those four stocks combine for nearly 40% of GDX’s weight. Citi is not the only brokerage firm to recently issue a bearish view on gold miners. Last week, Jefferies downgraded Barrick, Goldcorp and Kinross Gold (NYSE: KGC), saying that gold prices will need to fall further before companies start lowering production and even when production is pared it may not make a significant difference for the miners. Kinross accounts for another 4.5% of GDX’s weight.

Citi said “companies are trying to adjust by cutting capex, exploration and corporate costs,” but added “further cuts are necessary in the coming 12 months to make ends meet,” according to Zerohedge.

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