In mid-July, anyone investing in gold mining companies saw their year-to-date share prices fall to levels not seen since the 2008 financial crisis, down more than 50% on the year.
As Money Morning Global Investing Strategist Martin Hutchinson pointed out, no sector right now is more unloved than the gold sector.
The sector's selloff was fueled by the steep decline in the price of gold, which in turn led to a rash of write-downs on gold assets across the industry. The past two months alone saw over $21 billion in write-offs across the industry globally.
The biggest gold companies led the way in writing down their assets.
Barrick Gold Corp. (NYSE: ABX), the world's biggest gold producer, took an $8.7 billion write-down. It is also in the process of trying to sell some of its assets.
The world's largest market cap gold producer, Goldcorp (NYSE: GG), recently wrote down its assets by $1.96 billion. The company also lowered its planned spending target on projects.
That write-down was followed by a similar announcement from Newmont Mining Corp. (NYSE: NEM), the world's second-largest gold producer. Newmont's write-down amounted to $1.77 billion.
A funny thing happened, though, after the write-downs were announced.
The stocks of the companies involved, after an initial blip down, stabilized. Perhaps the vicious selloff in these stocks earlier this year had anticipated this bad news.
The only question now for investors is if the worst is over – do higher prices lie ahead in 2013 for those investing in gold miners?
A bounce from the lows in the Market Vectors Gold Miners ETF (NYSE: GDX) supports the thought that the sector has bottomed. The ETF is up more than 10% in five days.
So does the fact that money is flowing back into the ETF. More than $100 million flowed into the fund since it bottomed in late June.
But the real positive for the gold mining companies is the fact that gold has climbed back above $1,300 an ounce and stayed there…
This price of gold is a level where many of the major gold mining companies can make a profit. Below $1,200 an ounce, as much as half of global gold production would become an unprofitable venture.
To find the best opportunities, however, investors will need to do a little homework. There are many things to consider when investing in gold miners, including cash flow.
But there's one very key number to look at among all the figures released by gold companies…