As the profit margins dipped, shareholders dumped the mining stocks and ETFs. Many investors decided that they preferred holding bullion ETFs instead of the shares of companies that had poor track records for allocating capital. Denbow says that the outlook for many companies is improving. Faced with stagnant gold prices, managements are cutting costs and canceling costly projects. Some companies are raising dividends, returning cash to shareholders instead of spending on chancy developments. Denbow typically favors low-cost producers with good balance sheets and solid profits. Most often the cautious approach has enabled the actively managed USAA mutual fund to outdo competing index ETFs. During the past five years, the mutual fund has lost 4.0% annually, compared to a loss of 6.4% for Market Vectors Gold Mines ETF. During the past ten years, USAA returned 14.8% annually, ranking as the top-performing precious metals mutual fund. To limit risk these days, Denbow is focusing on larger established companies. He worries that smaller operators may have trouble raising capital in the current environment. A favorite holding is Goldcorp. ( GG), a big Canadian operator with mines in North and South America. He says that the company is showing discipline about new projects. "They are talking about avoiding projects that can't deliver adequate returns on capital," he says. Follow @StanLuxenbergThis article was written by an independent contributor, separate from TheStreet's regular news coverage.