As investors, we are always looking for an edge, and there are many to be had. One of the greatest edges we have as small individual investors is that we don't have to disclose our positions in companies. This is not true for large institutional investors, who must report their holdings to the SEC each quarter. These filed reports known as 13-F's are required for funds with over $100 million under management. A look at some of these holdings allows us to follow in the footsteps of some of the best.

The Paulson story
John Paulson has been in the finance industry for a long time, but it wasn't until he cashed in on his bet on a U.S. housing collapse that he became a household name. This bet paid off in 2007 as the housing market's rapid deterioration began. Paulson's funds reportedly made profits of $15 billion that year.

This past January, Paulson made another big bet: He launched a hedge fund that only makes gold-related investments. Paulson told investors at a meeting to introduce the fund that central banks around the world were only beginning to stock up on gold, as they were no longer sellers of the precious metal. He also is bullish on gold because he believes its availability is constrained and finite, and with future inflation, demand will continue to increase.

Paulson isn't just betting on the price of physical gold to increase, although he does have a large share in the physically backed gold ETF SPDR Gold (NYSE: GLD). Some of his largest positions are in gold miners and producers. The mining space has excited investors in part because of the recent spate of buyouts. Newcrest Mining recently reached an agreement to purchase Lihir Gold, and Eldorado (NYSE: EGO) acquired Sino Gold in December. The fighting has been fierce in cases such as Goldcorp's (NYSE: GG) recently outbidding Eldorado for Andean Resources.  

Let's look at some of Paulson's top gold holdings and see whether they make sense for your portfolio.

NovaGold Resources (AMEX: NG)
NovaGold is a Canadian gold miner that Paulson has held for a while. However, Paulson disclosed in a recently filed report to the SEC that he had increased his stake in the company to a whopping 9.1%, and that he plans to take an "activist" role. Paulson may be looking at ways to increase the value of the company to entice buyers for NovaGold.

Kinross Gold (NYSE: KGC)
Kinross Gold's recent acquisition of African gold producer Red Back Mining has the company on pace to join some of the world's largest gold producers. Kinross has been a strategic acquirer in the past, but with its latest acquisition, the company believes it can reach production levels of 3.9 million ounces by 2015, making it a major world player in gold production. Red Back's lower production costs, along with economies of scale created from the acquisition, should enhance Kinross' margins.

Kinross shares many of its properties with mining giant Barrick Gold (NYSE: ABX), which has many speculating that Kinross would be a possible takeout target itself. So the company gives investors a strong growth play, as well as being speculative.

AngloGold Ashanti (NYSE: AU)
AngloGold is a Johannesburg, South Africa-based gold miner with significant operations in Brazil and Australia, as well. It is expanding to underdeveloped areas such as Saudi Arabia, Egypt, and Eritrea. The company believes there are significant undiscovered resources in these countries and recently developed a partnership with Saudi Arabian investment group Thani Investments in order to have a greater presence and stronger business relationships in the region.

The Foolish bottom line
While I don't recommend putting all your money in gold investments, it certainly makes sense to have some exposure to the yellow metal. The gold miners are a good way to gain that exposure with the added upside potential of M&A, as well as stock price appreciation even if gold remains relatively flat.

Do you think buying the gold miners is a good play on the price appreciation of gold? Let us know in the comments box below.

True to its name, The Motley Fool is made up of a motley assortment of writers and analysts, each with a unique perspective; sometimes we agree, sometimes we disagree, but we all believe in the power of learning from each other through our Foolish community.

Andrew Bond owns no shares in the companies listed. Try any of our Foolish newsletters today, free for 30 days. The Fool has a disclosure policy.