Gold prices have been climbing, rallying over 27% year-to-date. And, if history is any guide, investors might be eyeing gold miners as a way to turbocharge their returns.

But hold that thought, says Oktay Kavrak, director of communication and strategy at Leverage Shares. "A gold rally can supercharge miner profits if costs are controlled. But that's a big ‘if.'"

Responding to Benzinga over an exclusive interview via email, Kavrak dismantled the common assumption that gold miners simply track bullion. While gold and miners posted similar returns over the last decade, the journey couldn't have been more different.

"Owning miners is not the same as owning gold. It may feel similar, but structurally, it's apples and oranges," said Kavrak.

Read Also: Gold ETF Bleeds Money At Fastest Pace In 3 Years — Is The Safe-Haven Trade Over?

Gold Might Be Soaring, Miners Can Sink

Why? Because miners are businesses — and messy ones at that. From bloated costs to bad management to unexpected hits like floods or thefts, "gold might be soaring, but miners can still sink," Kavrak warns.

Even when gold rises, gains don't always trickle down. "If it costs $1,500 to produce an ounce and gold rises from $2,000 to $2,100, that's a 20% boost in profits on just a 5% move in gold." But the same math works in reverse — amplifying losses when gold dips.

In a way, gold miner stocks work like a leveraged ETF play on gold. “Their monthly volatility is routinely double that of gold, noted Kavrak.

The volatility shows: miners routinely swing twice as much as gold, crushing their risk-adjusted returns. "You had to stomach twice the risk for the same reward," Kavrak notes.

Benzinga looked at the physical gold tracking SPDR Gold Trust GLD and the gold miners tracking VanEck Gold Miners ETF GDX to compare year-to-date returns, and while GLD is up 25.70%, GDX is up 49.26%.

Bottom line?

If you want stability, stick to the metal. "Ask yourself: do you want exposure to the metal or to the business that digs it up?"

Read Next:

• Investors Are Buying Gold Stocks: What’s Going On With Barrick Mining, US Gold And Newmont Shares Today?

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