Gold Miners Finally Catch Up with Bullion as GDX Hits 10-Year High

Gold's surge past $4,400 an ounce has finally caught up with gold miners. The VanEck Gold Miners ETF (GDX) is up almost 18% over the last month and a whopping 53% over the last year. However, its year-to-date performance lags behind, a reminder of how long producers trailed bullion before the July breakout.

GDX tracks the NYSE Arca Gold Miners Index, which includes top holdings like Newmont (NEM) and Agnico Eagle Mines (AEM). Newmont's Q2 realized gold price was $4,414 per ounce against a byproduct AISC of $1,621, driving a 33% year-over-year gold price gain.

The real yield backdrop is the single variable driving GDX over the next 12 months. The 10-year Treasury yield sits at 4.68%, in the 96th percentile of its trailing 12-month range and up from a February low of 3.97%. A drop toward 1.5% would juice GDX far more than the metal itself.

Inside the fund, watch All-In Sustaining Costs (AISC). Newmont's byproduct AISC is comfortably under full-year guidance of $1,680, and Agnico is tracking inside its $1,400 to $1,550 range. The margin cushion at $4,400 gold is enormous.