Image source: Getty Images

Your take on the gold and precious metals sector depends a lot on your reference point. And to some degree, that's going to help determine whether you see Barrick Gold (GOLD 2.11%), Newmont Mining (NEM 2.10%), and Goldcorp (GG) -- three beaten-up gold stocks -- as bargains or not. One key factor you need to keep in mind, however, is how they've changed along the way.   

Up or down?

So far this year Barrick Gold, Newmont Mining, and Goldcorp are up around 175%, 130%, and 55%, respectively. Based on that time span, it would be hard to call these beaten-up stocks. But that's not the whole picture.

The commodities market was in high gear up to about 2011, when a deep downturn began. If you go back to that point, Barrick, Newmont, and Goldcorp are down about 60%, 30%, and 60%, respectively: now that counts as beaten-up. But if you juxtapose these two data sets, it makes sense to ask if they are still bargains. A lot depends on how much they've changed.

For example, Barrick Gold has been working hard to cut costs, and it isn't done yet. In 2014 its all-in sustaining costs -- what it cost the company to pull an ounce of gold from the ground -- were $864 an ounce. In 2015 that number fell to $831, and management believes it can drive that down to as low as $725 an ounce by the end of 2018. So this year's gold rally is clearly a key part of what's driven up the price of gold stocks like Barrick, but this particular miner hasn't been waiting around for volatile commodity prices to save the day. It's actively working to improve its operations, and it has more room to go.

Image source: Barrick Gold.

Better than most

Another reason to like Barrick is the quality of its assets. The company reports that its average reserve grade is 1.3 grams of gold per tonne of earth. That's above the average for large gold miners, which is closer to 0.85 g/t. Newmont and Goldcorp are also above that average, with reserve grades of 1.06 and 0.95, respectively. So there's a lot to like about Barrick, but there are things to like about fellow miners Newmont and Goldcorp, too.

And it's not like Newmont or Goldcorp have been sitting idle, either: These two miners have been improving their operations just like Barrick. For example, Newmont's all-in sustaining costs were over $1,175 an ounce in 2012. Last year that number was down to $898 an ounce, and through the first six months of 2016 it's about $850 an ounce. That's not quite as good as Barrick's number, but it's still toward the low end of the cost curve.

Goldcorp, meanwhile, had all-in sustaining costs of $884 an ounce in 2012; that jumped as high as $1,035 in 2014 before coming back down to $894 in 2015. Goldcorp hopes it can keep its all-in sustaining costs as low as $850 an ounce this year. In the first quarter it achieved $836 an ounce, so it's in a good position so far. And that's still a decent spot on the cost curve, even if it isn't up to Barrick's standards.

Image source: Barrick Gold.

Forget gold prices...

If you are looking at the gold space and trying to figure out if there's still value to be had, you should look beyond the price of gold. One key metric is the costs a gold miner faces, particularly its all-in sustaining costs. Barrick, Newmont, and Goldcorp all look pretty good on that metric, in addition to the quality of their assets.

That said, the price of gold is clearly going to play a big part in the price the market assigns each of these three companies. But by keeping their costs low, they are better positioned to benefit if gold prices continue to go higher -- and better insulated if gold prices fall anew. Essentially, each of the three is working hard to build value in its business by improving its operations.

So if you look from the last peak, Barrick, Newmont, and Goldcorp still seem like beaten-up gold stocks despite this year's rally. More important, perhaps, they all appear to be creating value for investors today...and that could pay dividends tomorrow.