After several years of disappointment, gold miners exchange traded funds are thrilling investors to start 2015. Firming gold prices are helping.

After falling more than 2% last year while shedding $3.2 billion in assets, enough to drop it from the 10 largest ETFs, the SPDR Gold Shares (NYSEArca: GLD) is up 3.2% since the start of this year. However, a 3.2% in the still nascent new year does not erase the fact that gold finished 2014 lower, its second consecutive year in the red. GLD is off nearly 27% over the past two years.

Even with gold prices faltering, production remains sturdy, an important factor to consider when evaluating ETFs such as the Market Vectors Gold Miners ETF (NYSEArca: GDX) and the Market Vectors Junior Gold Miners ETF (NYSEArca: GDXJ). [More Fuel for Gold Miners ETF Rally]

“Despite the fall in gold prices, production is increasing. This is mainly because most mines are long-term. From January to October 2014, world production was 2,379.6 tons. This is 3.4% higher than the same period last year,” according to Market Realist.

Although the average all-in cost of production for large miners, such as those found in GDX, was $1,350 an ounce in the first half of last year according to Market Realist, that is more than 10% above where gold futures closed last Friday.

Miners also extracted about 559,000 ounces of gold over the third quarter, up 2%, compared to the previous three months. As recently as November, some gold market analysts said industry-wide production costs hovered around $1,300 an ounce. [High Break-Even Costs Weigh on Miners ETFs]

Still, the economics of closing a large gold mine only to reopen it later are less attractive than continuing to produce bullion, even at current prices. Low prices are not prompting increased hedging by miners.

Subscribe to our free daily newsletters!
Please enter your email address to subscribe to ETF Trends' newsletters featuring latest news and educational events.