2022, for investors at least, will be remembered as a weird one.
The year has seen seemingly contradictory forces come together to produce results that are entirely different from conventional wisdom.
One such oddity has been depressed gold prices and gold shares.
Usually investors associate gold as a "safe haven" during times of high inflation. The idea is that the precious metal retains value far better while other assets depreciate.
Rampant inflation, as many readers would know, has been the hot topic for pretty much all of this year.
But currently, according to goldprice.org, the price for the commodity is actually lower than where it started 2022. It's also lower than where it was 12 months ago.
Very odd.
However, Shaw and Partners portfolio manager James Gerrish reckons last week the situation started to turn around.
"Gold stocks finally found some love, hence we've updated our view on three of the major names," he said in his Market Matters newsletter.
"Although, not surprisingly, there's a degree of similarity across the sector."
Here are the three ASX gold shares that are looking good at the moment:
Image source: Getty Images
'We like the risk/reward' for this gold miner
It's been a brutal few months for shareholders of gold miner Newcrest Mining Ltd (ASX: NCM).
"Heavyweight gold stock Newcrest Mining has endured an awful 2022 falling over 45% from its April high under the combined weight of rising bond yields and an extremely strong US dollar," said Gerrish.
"However, as bond yields threaten to soften following the Bank of England's intervention we can see gold and its related stocks regain some of its lost lustre."
Newcrest shares closed Wednesday at $17.89 each.
Gerrish's team favours the stock as a buy now for a rally heading into the festive season.
"Market Matters is bullish [on] Newcrest into Christmas, initially targeting the $20 area," said Gerrish.
"We like the risk/reward to Newcrest around $16.50 looking for ~20% upside into 2023."
'Rally could be hard and fast'
Northern Star Resources Ltd (ASX: NST) investors have also had a frustrating year, seeing the stock price lose almost 40% from mid-April to last week.
"Northern Star has held up better than most of its peers over recent weeks but it's still been a tough year for the gold miner."
However, Gerrish believes the current pessimism on gold is "quite extreme".
"We believe this stock offers good value at current levels and when the sentiment turns for the sector the rally could be hard and fast."
Northern Star has already rallied almost 22% since Monday last week to close Wednesday at $8.48 a share.
'40% upside into 2023 feeling very achievable'
Evolution Mining Ltd (ASX: EVN) is a similar story to Newcrest, according to Gerrish.
"Evolution looks like an exaggerated form of Newcrest having fallen over 60% from its April high," he said.
"However, we also now like the risk/reward towards Evolution, with 40% upside into 2023 feeling very achievable."
The Evolution share price finished Wednesday at $2.10.
"Market Matters is bullish on Evolution targeting the $2.75 area," said Gerrish.
"We like EVN as a contrarian/countertrend play into Christmas."
