No one interested in current income buys gold mining stocks, because those stocks are traditionally all about capital gains. As ‘leveraged plays on the price of gold,’ the miners work this way:

Let’s say gold is $1,000 per ounce and a hypothetical miner produces a million ounces annually, eking out a net profit of $10 million, or $10 per ounce produced. There’s no money here for dividends, obviously, and virtually nothing for capex. Someone hoping for current income would have zero interest in such a stock.

But let the gold price rise by $100 per ounce or 10%, and the miner’s profit jumps by 900%, to $110 per ounce. In most market environments the stock of such a company will rise, which is the outcome most capital gains-oriented investors want.

But something else happens at the same time. Most of this torrent of found money will no doubt go towards our hypothetical miner’s expansion. But some, assuming management is reasonably enlightened, will flow back to investors in the form of rising dividends.

And just like that, a speculative capital gains vehicle becomes an income play, attractive to a whole new segment of the investing public.

With gold now up by several hundred dollars in the past couple of years, the above dynamic is playing out across the sector, as marginal operations become free cash generators, giving management a chance to reward their long-suffering investors with monthly income.

Leading the way is industry giant Newmont, which raised its dividend by 79% (from an admittedly modest base) in the most recent quarter. Its stock now yields around 2%, comparable to Treasury paper but with a lot more upside potential.

Mid-tier miner Yamana, meanwhile, doubled its dividend in July of last year and then added another 20% bump at year-end.

This trend is just getting started. If gold’s price holds up in the coming year, most gold miners will see rising cash flow, making dividend increases the norm going forward.

The prospect of 2%-3% yields on high-quality gold and silver miners and, by implication, rising yields on ETFs like GDX and GDXJ that own them, might draw the interest of people who care about current income. And since there are way more income investors than mining stock speculators, even a small shift of capital from bank accounts and bond funds into the miners will make a huge difference.