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How Cheap Are Gold Stocks Relative to Bullion?

There is a much simpler way to estimate if miners will outperform the price of gold or not: look at the gold/oil ratio.
If you take the price of oil as an indicator for operating cost, a decline ratio of gold/oil implies decline profitability because it the miners' cost (oil) increases more than sales (gold).
However, if the gold/oil ratios rises, it implies that sales (gold) outperform cost (oil) which should make the miners more profitable.

It is interesting to note that from 2001 to 2002, the gold/oil ratio was rising, from 2002 until 2006 decline, from 2006 to 2007 rising, and recently declining again. So I am not surprised that miners have become less profitable lately.