This year has seen a sharp change in fortunes for gold miners. As concerns about global growth and the state of the world’s financial system have weighed on the wider market, this has sent investors rushing to the yellow metal, which is widely considered to be an insurance policy against market volatility.

And this year’s rally in gold prices has been extremely welcome news gold miners, which have spent the past two or three years hunkering down, cutting costs and writing off billions of dollars of investment as the price of gold has languished.

However, now gold prices are recovering, investors are rushing back into the gold mining sector. For example, shares in Randgold Resources (LSE: RRS) have gained a staggering 48% year-to-date outperforming the wider FTSE 100 by around 49% excluding dividends, and there could be further upside to come for the miner if gold prices continue to rise.

Sector leader

Randgold is one of the best-managed miners in the world, and the company could be the perfect play on the gold price. It has a very conservative operating model and will only take on projects with a 20% internal rate of return based on a gold price of $1,000 per ounce. This strict investment policy means the miner hasn’t commissioned expensive vanity projects, and the group has a cash-rich balance sheet with Q1 cash and equivalents of $213m.

Randgold has AISC (all-in sustaining costs) of $797 per ounce and analysts at Bank of America believe that a 5% move in the gold price could boost the company’s earnings before interest tax depreciation and amortisation by as much as 12%.

Randgold isn’t the only miner that’s outperforming the wider market this year off the back of higher gold prices. The company’s peers Fresnillo (LSE: FRES) and Centamin (LSE: CEY) are also showing impressive gains for the year.

Small-cap champion

Shares in small-cap miner Centamin have gained 75% so far this year as the company has continued to improve its operational ability, lower costs, increase output and maintain a conservative business model.

At the end of Q1, Centamin reported that it was debt-free and unhedged with cash, bullion on hand, gold sales receivable and available-for-sale financial assets of $230.7m, up around 50% year-on-year. AISC are $900 per ounce.

Centamin’s shares currently trade at a forward P/E of 13.2 and support a dividend yield of 2%.

Lagging the pack

Fresnillo has only seen the value of its shares rise by 52% so far this year, which is still an excellent gain, but the company’s shares are lagging behind some of its more operationally efficient peers such as Randgold and Centamin.

After reporting earnings per share of only 4.9p for the year ending 31 December 2015, City analysts expect Fresnillo to report EPS of 20.2p for this year. On this basis, the company is trading at a forward P/E of 53.5 and is set to support a token dividend yield of 0.8%.

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Rupert Hargreaves has no position in any shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.