Money Pours Into Precious Metals Funds

"There is no doubt the gold ETFs have been considerable competition for the gold mutual funds," says Eveillard.

Prior to the introduction of the bullion exchange-traded funds in the first half of the decade, if you wanted to be involved with physical gold it was "extremely cumbersome" -- and that meant the only practical alternative was buying mining stocks.

People wanting to buy gold had to find a dealer (preferably a reputable one) and then lug the metal home, he says. And when it came time to sell, the process was just as cumbersome and expensive.

"Then, all of a sudden, you could buy gold bullion in paper form. So it became very easy to buy gold in its pure form," rather than through owning mining shares or mutual funds. And when buying paper gold, investors don't have to worry about the operating risks inherent in mining operations.

In addition to that, at least another part of the problem seems to be that investors large and small have woken up to the fact that, recently, mining shares just haven't been keeping up returns from owning the metal -- which wasn't always true.

While spot prices for bullion have rallied 9% to about $854 an ounce from $783 over the past six months, the gold miners, as measured by the Amex Gold Bugs Index, were actually down by about 10%.

GDX vs. GLD

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That's a change from the past, when mining shares have outperformed the commodities they produced during periods of price appreciation.