"Gold stocks are a levered play on gold............................ One of the most dominant reasons for the divergence between gold miners and gold is gold miners’ operating leverages. Gold miners’ profits fall faster and rise higher than gold prices because gold miners have fixed costs. The cost to mine gold is usually similar under various gold price levels. As a result, when gold prices rise, gold miners have the potential to provide much higher returns. The operating leverage works the other way." http://finance.yahoo.com/news/comparative-analysis-gold-miners-performed-193858187.html