If you've ever pondered investing in gold, your first thought is probably to buy a gold exchange-traded fund such as the SPDR Gold Shares ETF (NYSEMKT:GLD). There are plenty of reasons to think gold could rally, so it's a reasonable time to consider investing. Gold prices have been hammered over the past year while the S&P 500 Index climbed. Known for its status as a fear trade and a hedge against economic uncertainty, gold lost its luster as the economic recovery held steady and the Federal Reserve tapered off its stimulus programs.

However, the economy is by no means firing on all cylinders, and renewed geopolitical tension has reared its ugly head once again. If you suspect gold is on the brink of a rally, now might be the time to buy. But there may be a better option than a traditional gold exchange-traded fund. A better way to play gold seems to be to buy the gold miners themselves. That's because owning mining stocks such as Newmont Mining (NYSE:NEM) and Goldcorp (NYSE:GG) will allow you to benefit from rising gold prices as their earnings improve, and give you strong dividend yields along the way.

Benefit from upside, protect against downside
There are plenty of arguments for why gold prices might rally after such a crushing 2013. Should gold rise, investors may be better off buying stocks of miners themselves rather than a simple gold ETF. A gold exchange-traded fund will indeed give you exposure, but you're making a simple bet on the price action itself, meaning you won't receive any yield.

Buying gold miners like Newmont and Goldcorp will also pay off if gold prices rise, since their sales and earnings will undoubtedly improve. That means you'll be sure to benefit from any upside in gold prices. This is evident in the fact that these gold miners are keeping production going strong and boosting profitability through cost cuts, meaning they'll pass through the inevitable upside in profits should gold prices improve.

Newmont isn't sitting idly by waiting for gold prices to rise. It's taking steps to increase profitability by monetizing under-performing assets and aggressively cutting expenses. Newmont recently sold its investment in Canadian Oil Sands Limited for $587 million, and it delivered nearly $1 billion in cost savings and efficiency improvements last year.

For its part, Goldcorp is keeping production going strong, even throughout the downturn in gold prices. It increased its gold production 11% in 2013, and has even more ambitious plans going forward through acquisition. Earlier this year, Goldcorp announced its intention to pursue Osisko Mining (NASDAQOTH:OSKFF) in a $2.6 billion hostile takeover bid.

Goldcorp covets the Malartic mine, the only mine owned by Osisko in operation, which is expected to produce 500,000 to 600,000 ounces of gold per year over its 16-year life. Even excluding the potential of the acquisition, Goldcorp projects its 2014 gold production to increase 13%-18%, and by 50% over the next two years. And, Newmont increased gold production to more than 5 million ounces last year.

Collect some dividends along the way
As an added benefit to owning gold mining stocks instead of an exchange traded fund, investors can get some yield while they're waiting for gold prices to recover. Both Newmont and Goldcorp pay dividends that amount to approximately 2.5%, which is nothing to sneeze at. Those kinds of yields are higher than the broader market's dividend yield, so those are no token payouts.

Dividends provide a nice return boost when stock prices go up, and a valuable source of downside protection when stock prices decline. For investors interested in playing gold, you might do yourself a favor by digging deeper than simply buying a gold ETF. Gold miners like Newmont and Goldcorp will do well if and when gold prices rise, so investors are covered in that regard. In addition, if gold prices don't rise as expected, their dividend yields will pay you well to wait for the turnaround.

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Bob Ciura has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.