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(Bloomberg) — Gold-mining companies that are seeing their shares surge the most in decades are still cheap, based on historic measures of their reserves.

An index of large producers, including Barrick Gold Corp. and Goldcorp Inc., has gained a whopping 87 percent in the past three months, more than four times the gold-price rally. That’s after three years of slumping prices made miners leaner, meaning more of the bullion gains flow through to their bottom lines.

While the rally has made shares expensive by traditional valuation metrics such as future earnings, they are still 19 percent cheaper than at the same point last year based on the value of their gold reserves, according to data compiled by Bloomberg.

“Despite the rally in gold and despite the increase in the value for the companies, they’re still trading at a significant discount to where they’ve traded in the past,” said Ken Hoffman, an analyst at Bloomberg Intelligence in Skillman, New Jersey, said. “Gold doesn’t have to get to $1,800 for companies to revisit where they were at their peaks.”

This quarter, the 14 members of the BI Global Senior Gold Valuation Peer Group trade at an average 38 times estimated earnings, compared with a ratio of 20 a year ago. But the index’s enterprise value is about 90 times their gold reserves, down from 111 a year ago, the data show.

That’s partly because production costs are down by about a quarter from 2012, according to data compiled by Bloomberg Intelligence. The average all-in sustaining cash cost declined to $936.20 an ounce in the fourth quarter from a record $1,245 in September 2012, the data show.

In the case of Newmont Mining Corp., every $100 per ounce gain in the price of bullion adds $350 million to free cash flow after taxes, Chief Executive Officer Gary Goldberg said in February.

Gold is up 19 percent this year to about $1,265 an ounce after central banks from Europe to Japan switched to negative interest rates, while traders in the U.S. are pricing the odds of another rate increase by the Federal Reserve before December at less than 60 percent.

That makes bullion a more attractive asset against interest-bearing bonds, and equities that are already seen bearing the brunt of slowing global growth. All these are providing the tailwind that Alan Gayle has been waiting for for three years before jumping back into the asset class.

“We knew these miners were cheap because they were oversold,” said Gayle, a senior strategist for Atlanta-based RidgeWorth Investments, which oversees $37 billion. “We waited. When we knew there was more to it than just a counter-trend rally, we started adding gold miners.”

Not all indicators are so impressive. Average debt among the 14 gold miners stood at 5.25 times their earnings before interest, taxes, depreciation and amortization in the fourth quarter, the highest in at least a decade, the data show.

Even before the rally this year, many had already positioned for the recovery.

In 2015, when bullion traded at a five-year low, the cost of gold assets rose to $119.40 an ounce, after bottoming at $96.20 in 2014, according to a Bloomberg Intelligence analysis of more than 100 mining deals.

“Private-equity firms have raised more than $33 billion just for mining deals since 2010 and have plenty of dry powder left,” Hoffman said.

Improving financial prospects are helping miners outperform the precious metal. The Market Vectors Gold Miners exchange traded fund generated the highest total return this year out of more than 100,000 funds linked to various assets including equities, fixed income, and commodities, according to data compiled by Bloomberg.

“A year ago, they couldn’t make money at $1,200,” said Dan Denbow, a portfolio manager at the USAA Precious Metals & Minerals Fund in San Antonio, which oversees $600 million. “They’ve cut costs they’ve right-sized mining operations, they’ve raised the grade that they’re targeting. They’ve adjusted to the new world.”

To contact the reporter on this story: Luzi Ann Javier in New York at ljavier@bloomberg.net To contact the editors responsible for this story: James Attwood at jattwood3@bloomberg.net Joe Richter