With gold's price continuing to flirt with the all-time high posted in March 2008, investors are understandably hesitant to dive into new positions. Although the macroeconomic landscape continues to point to further strengthening of the gold price, no one wants to be the last buyer in a stampede.

Although the long-term outlook for gold is clear and defensible, the short-term volatility in mining stocks can be absolutely gut-wrenching. Fools investing for the long haul may always be subject to the vagaries of market swings, but some measure of protection can be found by identifying relative values from within the universe of high-quality gold miners.

Yamana Gold (NYSE:AUY) stood out in October 2008 as an immutable value relative to its peers, and its shares have since appreciated 200% from that month's lows. After a run like that, might the shares be fully valued? Surprisingly, Yamana's enterprise value of $7.85 billion is just over 40% of the market value of its proven and probable gold reserves. By comparison, my top pick, Agnico-Eagle Mines (NYSE:AEM), was valued at 43% of the market value of gold reserves when I discussed their comparative valuations 11 months ago. Agnico shares have tripled since that time.

Looking back even further, Yamana shares remain 48% beneath the $19.47 peak they attained in March 2008 ... before the sector tumbled into an extended correction. Larger competitors Newmont Mining (NYSE:NEM) and Kinross Gold (NYSE:KGC) may be closer to their precorrection peaks on a percentage basis, but the entire sector remains fundamentally displaced from its precorrection levels. As a reference for that sectorwide repricing effect, the Market Vectors Gold Miners ETF (NYSE:GDX) remains 24% beneath its March 2008 peak.

Historical share prices by themselves say very little about present-day valuation, but in the case of Yamana, I think they speak volumes. Incredibly, Yamana shares closed at $12.96 on the last trading day of 2006. This predates Yamana's game-changing acquisitions, which sparked a massive production growth spurt, and helped to quadruple gold reserves from 4.5 million ounces to 19.4 million ounces.

Notably, the price of gold has appreciated 56% in the intervening period. Competitors such as Goldcorp (NYSE:GG) -- and even hedge-hogged Barrick Gold (NYSE:ABX) -- have sprinted past their respective year-end 2006 levels. When an eightfold increase in production volumes at industry-leading margins accompanies a 20% share price decline, someone may not be doing his math correctly. I think that someone is Mr. Market.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.