The gold/GDX ratio suggests miners may have fallen too much relative to gold.
The ratio of the price of gold to the price of the Market Vectors Gold Miners ETF (NYSE Arca: GDX) peaked at a record above 55 in June, before quickly falling to last trade near 46. As a group, gold miners have consistently underperformed the yellow metal since about 2007.
Lower gold prices may force mining companies to cut costs and streamline their operations, leading to better results. A reversion to a gold/GDX ratio of 23—seen as recently as 2011—could lead to a doubling in the ETF, just based on current gold prices.