One year ago today, I selected my top pick for 2009 from among a long list of promising precious metal miners. Clearly I was looking in the right place, as gold and silver miners collectively have vastly outperformed the S&P 500 over the ensuing 52 weeks, but the end-of-year collapse in shares of Agnico Eagle Mines (NYSE:AEM) has left my pick with a lackluster 6% gain.

For a while there I was feeling pretty confident about my choice. In October, Agnico shares peaked at $74 per share, which would have yielded a cozy 46% appreciation. The incredible array of hurdles that miners can trip over when developing and commissioning new mines, however, got the better of this bird … and the eagle abruptly broke a wing. The stock bounced back strongly on the strength of surging gold prices, just as 81% of you predicted it would in a Motley Poll, but shares were once again pummeled this week when the miner revealed slightly higher cost expectations for 2010.

I should have known better. The equity markets have so consistently overlooked value in the precious metals sector that I should have guessed some combination of operational hiccups or cost overruns would cause this treasure to remain undervalued for yet another year. In failing to price precious metal assets reasonably in relation to either projected cash flow or prospects for reserve expansion, the market has been entirely consistent.

Impacted by geological issues at the Kittila mine in Finland, currency fluctuations, and increases to labor and transportation costs, Agnico Eagle is no longer forecasting the kind of rock bottom cost structure that clinched its selection as my top pick. To keep the cost adjustments in perspective however, the $399 projected cost for each gold ounce in 2010 is right in the range of costs recently reported by major miners like Newmont Mining (NYSE:NEM) and Barrick Gold (NYSE:ABX). Lower production costs formed a core element of my rationale for preferring intermediate-scale miners over their more gargantuan counterparts, but at this stage Yamana Gold (NYSE:AUY) is increasingly alone in achieving results like the incredible $79-per-ounce cost reported in the third quarter. Many of the cost pressures reported by Agnico Eagle Mines are common to its competitors as well, so yet again I perceive a near-sighted overreaction by the market to the company's revised guidance.

With the next five years of annual production from Agnico Eagle Mines projected at over 1.4 million ounces, or almost 150% of 2009 production volume, I see plenty of fodder for robust cash flow that will ultimately find its way into the share price. Although the days of free gold -- when miners like Agnico Eagle with exceptionally rich ores reported production costs below $0 due to by-product credits -- are likely gone for good, Agnico remains an extremely competitive low-cost producer with enormous potential for organic reserve growth through exploration. During whichever year the market finally recognizes the cash flow that this miner could generate as the gold bull market progresses, Agnico Eagle Mines will finally yield returns worthy of a top pick.

Gold's golden outlook for 2010
I know Fools share my expectations for meaningful strength from this sector going forward, since a full 96% of readers responding to a recent Motley Poll agreed that: "Gold is money, and paper money is more impaired than ever before. Gold will continue to shine." It will come as no surprise to my readers that my selection for 2010 will certainly come from the precious metals sector. With prominent figures like Nouriel Roubini blasting gold in the press during this pullback, I feel confident suggesting that the results of that poll would be markedly different outside of the Fool community. Gold has attracted plenty of attention during the ninth year of its bull market cycle, but we are still a long way from the kind of universal investment exposure to gold or gold stocks that would give this Fool a moment's pause.

Incredibly, despite all the gains in the sector that have so many analysts incorrectly crying "bubble," the combined market capitalization of all gold miners is roughly equivalent to that of one single blue chip stock: Wal-Mart (NYSE:WMT). When gold miners like Agnico Eagle Mines become nearly universal components of mutual funds the way oil producers have, perhaps then we can begin to discuss the topic of saturated investment demand. Given all the attention miners have garnered for their share performance of late, Fools may be surprised to note that the Market Vectors Gold Miners ETF (NYSE:GDX) has yet to punch through its all-time high price of $56.87 recorded in March 2008.

Weighing the options for 2010
At the end of the day, do I wish I had selected my best stock pick of 2008 as my top pick for 2009? If I had chosen Silver Wheaton (NYSE:SLW), I could be sipping from the cup of victory, but then I would have missed this golden opportunity to remind Fools just how undervalued Agnico Eagle Mines remains despite the run up in gold prices since this time last year. I have half a mind to stick with the same pick for 2010, but there are a daunting number of potential high-fliers to choose from among the miners of gold and silver.

While I take time to mull over the selection of my top pick for 2010, please use the comments section below to nominate your favorite precious metal miner for consideration. If you have already included a "pitch" for the stock in your CAPS portfolio, then please include a link. Otherwise, let the Fool community know what you believe sets your favorite gold or silver miner apart from the competition.

Gold is a hot topic on the blogs at Motley Fool CAPS. Join the free service today and see just how many Fools are taking the long view when it comes to investing in gold. The "Gold" tag at CAPS lists 46 potential investments; you'll find Christopher's comments on many of them.

Fool contributor Christopher Barker thinks you can guess which of the James Bond movies he prefers. He can be found blogging actively and acting Foolishly in the CAPS community under the name TMFSinchiruna. He tweets. He owns shares of Agnico-Eagle Mines, Silver Wheaton, and Yamana Gold. Wal-Mart Stores is a Motley Fool Inside Value recommendation. Try any of our Foolish newsletters today, free for 30 days. The Motley Fool has a gilded disclosure policy.