If there ever was an environment illustrating how risky and tough resource investing can be, the current conditions for gold stocks are the textbook example.

Resource investing is a risk-capital only endeavor. When it comes to equities, resource-related stocks should never make up the core of a long-term investment portfolio. In almost all cases, even the fastest-growing, best-managed gold stocks still perform commensurately with the underlying spot price.

One of the best junior gold mining companies I know of is Argonaut Gold Inc. (TSX/AR). The company has growing production, but the stock is way down and can’t generate any momentum.

One of the best silver companies I know of is Endeavour Silver Corp. (EXK). In the second quarter of 2013, the company’s revenues grew to $71.1 million, compared to $40.4 million. Total silver production was up 48% to 1.5 million ounces in the most recent quarter, with gold production up 159% to 19,914 ounces.

Like Argonaut, Endeavour Silver is trading near a multiyear low on the stock market. It’s followed the spot price of silver almost exactly, falling consistently in value since the beginning of 2012.

While both companies don’t seem to be doing so well on the charts, they are both good mining companies. They have growing production, are keeping cash costs below industry growth rates, and their stocks are very reasonably priced.

The problem is they will stay reasonably priced so long as the spot price of yellow precious metal either remains flat or goes down. That’s the way it works in the gold mining business. The entire industry comes down to one financial metric—the spot price.

In the large-cap space, Newmont Mining Corporation (NEM) is trading pennies off its 52-week low, having lost more than half its value on the stock market over the last two years.

And the same goes for Barrick Gold Corporation (ABX). The company is now delaying plans for mine expansion, and the company’s management team cites only one reason for its lack of progress—the spot price of gold.

So, there is a lot of investment risk when it comes to investing in mining companies. Even the large-caps with seasoned management are 100% vulnerable to the action in spot prices. They, too, are risk-capital securities. (See “Business Stalls for Equipment Manufacturers; Outlook for Precious Metals Companies Flat.”)

Therefore, if you are considering investments in the gold mining industry, a greater analysis of the potential for rising spot prices is worthwhile. From my perspective, I don’t see gold prices moving up anytime soon unless there’s some geopolitical event.

There is, however, decent value in many gold mining stocks at this time, and the potential for turnaround situations is improving. But it definitely is a risky trade and a little too early, with spot prices where they are and institutional investors out of the sector.

Practically, I think most investors would be better off just betting on the spot price as desired. With so many options available like exchange-traded funds (ETFs), you can even trade in a leveraged capacity.

Speculating on gold is only worthwhile when there is a clear up-cycle in prices. I don’t know where gold prices are going to go, but I do know that mining stocks aren’t going anywhere without a more favorable spot price environment.