Hey, junior gold company investors, are we having fun yet? The gold sector, as you no doubt know if you are a participant, has been absolutely decimated this year.

Companies that were the toast of Bay Street less than two years ago are now being shunned and treated like vermin. It is common to see gold mining companies’ shares down 40%, 50% or even 70% this year alone.

What’s going on here? The price of gold, while not exactly surging in 2012, has been up for 11 years in a row, and is still up marginally this year. Sure, market sentiment overall is bad, but it seems junior-gold sentiment is worse than everything else.

What are the possible reasons for gold stocks to be singled out more than others this year? Let’s take a look at a few possible reasons:

Selling causes more selling. Once a sector like junior golds starts to decline, it can often bring out more selling. Both from individual investors receiving margin calls, and gold funds seeing redemptions, once the selling ball starts rolling it can be very hard to stop. A massive amount of money has poured into the sector over the past few years, and liquidity works both ways here. We would, for one, strongly advise not using margin to buy junior golds, so at least you won’t be ‘forced’ out of the sector at the exact wrong time.

Political risk: Investors used to have a love affair with Extorre Gold Mines (XG). And why not? The company was rapidly expanding its Cerro Moro gold deposit in Argentina, resources were increasing and its share price was surging. However, that has all changed now that Argentina has decided to expropriate some assets from resource companies. Extorre is down 68% this year, and gold investors are now worried about potentially losing assets in almost every country outside North America. Take Avion Gold (AVR), for example. A coup in Mail, where it operates, has caused the stock to also drop 68% in 2012, and the company has delayed its mill expansion because of the uncertainty.

Financing risks: Junior gold companies, of course, always need a constant source of funds. Whether they need money to drill resource targets or need millions (or billions) to develop mines, most gold companies continually go to the market time and time again to tap funds. Now that the junior gold market has turned venomously, investors are fretting that some companies won’t be able to raise needed capital to grow, or even continue operations. Even successfully raising money hasn’t helped much: Take Guyana Gold, (GUY) for example. It managed to recently raise $31 million, at $2.91 per share, but the stock has still dropped 40% from that issue, which only closed less than a month ago.

In the good ‘ole days, junior gold investors could count on a few takeovers to boost their overall returns. But in this market, even that isn’t working. Jaguar Mining (JAG) surged late last year on talk of a possible takeover by Shandong Gold Group. The takeover didn’t go through, shares are down 80% this year, the company is reducing costs, but Jaguar still needs to deal with a now-overhanging debt burden. The takeover was to be at $9.30 per share. To underscore how bad things have become in the gold sector, note the shares are now $1.32.

Finally, bad feasibility and resource studies are also taking the sector down. Canaco Resources, Inc. (CAN) this week came out with an initial resource estimate which was nowhere near what investors expected, and the news dropped the already-declining shares of the company another 66%. It is down 78% now this year. Hanna Mining (HMG) also this week disappointed investors with an update from its Botswana project, with the stock dropping 68% on Tuesday and 86% so far in 2012.

What will it take to turn this sector around? Well, generally, when things are so bad investors get sick to their stomachs; a bottom is usually close at hand. Talking to many investors recently, we have to believe we are near—or even past—that point already.