From our Tactical Report of 19th Jan 2016:

Gold miners continue to cheapen to the gold price.  Using the Philadelphia Gold and Silver Index (which has the longest history), precious-metal miners are now as cheap as they have ever been to the gold price.  While many gold mining companies are encumbered with large amounts of debt, input costs have been falling.  Energy costs have fallen, and a stronger dollar has enabled miners to save on local costs (eg wages, often in EMFX and commodity FX), while selling their product in dollars.

Much bad news is priced in for gold miners and it would not take a great change in sentiment to see an outsized reaction in the price.  The GDX index (essentially an index of the largest gold mining companies, skewed to Canadian firms) has been looking to bottom for some time now.  Moreover, it is largely uncorrelated with the S&P, and this correlation has been trending down for many years (bottom chart).  The GDX (either outright, or vs gold) is a good portfolio diversifier, with the likelihood of seeing greater gains than losses over the coming months.

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Source: Macrobond and Variant Perception