London - After a once-in-a-generation plunge in the bullion price left investors nursing their wounds, gold equities - long unloved - showed the biggest two-month net inflow for two years in July and August.
That might in part be thanks to a recovering gold price, but also, analysts say, because the miners have taken hefty writedowns, slimmed down projects and put others on hold to save cash, after years of chasing volume at all costs.
A recovery in the price of gold has not, after all, helped gold exchange-traded funds (ETF), which are still seeing outflows.
ETFs have been exceptionally successful since their inception in 2003, responding to the needs of sophisticated investors looking for tools to take full advantage of soaring gold prices. They absorbed 2,691 tonnes of gold over the following 10 years, as gold prices benefited from ultra-loose monetary policies around the world.
But investors started to dump the ETFs when the 12-year-long upward trajectory of gold prices came to an abrupt halt in April; spot gold dropped $200 an ounce, or 13%, in two days, its sharpest slide in 30 years, after the US Federal Reserve indicated its plan to taper off monetary stimulus.
Net outflows reached 660 tonnes this year, or almost $28bn at today's gold prices.
July and August saw the tide slowing, but net outflows from precious metals ETFs still stood at close to $2bn, equivalent to 2.7% of total assets held, according to Lipper estimates. Excluding platinum and other non-gold ETFs, the outflows were even bigger, at $2.3bn or 3.7% of current assets.
Meanwhile, combined net flows into gold and precious metals equity funds in those two months reached $275m, the biggest inflow since the summer of 2011.
"It has been a theme that people have been looking to get exposure to gold through the actual miners themselves after the gold price crash in April," said Hargreaves Lansdown investment manager Adam Laird.
"A lot of investors feel that the reasons they made the decisions to buy gold in the first place have not changed."
August showed the fifth straight month of improving net flows since peak outflows of $1.14bn in April, and only one of the top 10 gold and precious metals equity funds by assets showed a net outflow over the two-month period, according to Lipper.
According to estimates from Lipper, the SPDR Gold Trust, a physical gold commodity fund and the world's largest gold-backed fund, saw $1.9bn of net outflows in July and August - almost 5% of current assets. Yet in equities, the BlackRock World Gold Fund has seen net inflows of $25m in the same period.
"Over a period of quarters, I will probably continue to look to increase my position in physical gold and gold equities - but not ETFs, because I can buy physical gold on my own," said Jeffrey Saut, chief investment strategist at US-based Raymond James Financial. Saut invests in the OCMGX Gold Fund, with exposure to Goldcorp and Randgold Resources.
Shining at last
Gold miners have underperformed physical gold over the past few years, as returns for investors dropped while producers invested heavily to pursue growth, tackling increasingly challenging deposits, rising costs and resource nationalism.
"It would make sense that investors are looking at gold equities, as managements are beginning to act - this gold price drop is actually healthy for the industry in more ways than one," said analyst Tyler Broda at Nomura.
Faced with squeezed margins that pushed many mines into the red, miners have shifted focus from growth to costs, where problems were long camouflaged by rising gold prices.
Broda quoted the example of African Barrick Gold, a unit of Barrick Gold and long time underperformer. In the year to date, it has underperformed the gold sector by more than a third and the broader mining sector by almost 60%.
African Barrick has cut exploration, corporate and other costs and reviewed operations at mines including Buzwagi in Tanzania - its highest cost and lowest grade mine. At that mine, it cut the amount of waste processed, improved scheduling to reduce idle hours, brought in more local staff and reduced the life of the mine to turn it cash positive again.
Since those broad cost savings were announced at the end of July and a new boss was brought in, the shares are up almost 40 percent, outperforming the gold sector by 50%.
"The fact management teams are starting to act will make gold companies more attractive than a few years ago, when you needed gold prices to go up to get your returns - when that is the case you might as well be in the gold ETFs, with less risk."
Small investors are also taking note.
Since August, when Britain's retail investors were allowed to hold stocks listed on the AIM growth market in individual savings accounts (ISAs), which have favourable tax status, four of the 20 most bought are gold miners, including junior miners Amara Mining and Red Rock Resources, according to Interactive Investor data.
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