First hint that something was stirring at the bottom of the coal pond came this week at the Mines and Money gabfest in Sydney, when a research analyst from the big Swiss bank, UBS, surprised his audience by revealing coal as his top investment pick.

Less than a day later, another investment bank, Credit Lyonnais Securities Asia (CLSA), chimed in with research suggesting coal had paid the price for flying too high in 2011, followed by this year’s crash, and was poised for a 2013 recovery.

The CLSA view is partly based on an observation that natural gas prices in the US have started to rise with the price of thermal coal to follow, as electricity generators crunch the numbers on which fuel source is cheapest for them to burn.

As for metallurgical coal, CLSA reckons that when China restarts its growth engine demand for steel-making, coal will follow.

There are obvious holes in the CLSA argument, which pessimists have been quick to point out, such as US gas production showing few signs of a significant decline despite a sharp fall in the number of active drilling rigs, and China showing few signs of recovering from what has been a much harder economic landing than anyone expected.

Knowing which way China will go is a game others can play, though Hogsback reckons the chaps in charge of that one-party state will be shivering in their boots at the thought of violent social unrest if they can’t get the growth engine firing again.

As for the natural gas phenomenon in the US caused by the discovery of ways to extract gas from rock once considered too tight to flow, there may be signs of reduced drilling but there is no sign yet of reduced production.

Less gas should follow the retirement of about half the fleet of drilling rigs, though continued advances in tight-gas extraction technology, such as longer horizontal wells, appears to be countering the effect of fewer vertical holes.

CLSA acknowledges the unknowns in its forecasts, but also points out that some of the world’s better-known coal stocks have crashed so low it’s hard to see them falling further, meaning that the only way next year is up.

Alpha Coal in the US is trading at more than 80% below its peak, and other top coal stocks are down 50%-70%.

It’s the price falls that have also caught the eye of researchers at UBS, led by the firm’s global commodities analyst Tom Price.

It was Price who bounced to the podium at Mines and Money this week to surprise delegates with a list of preferred commodity investments for the year ahead, topped by thermal and metallurgical coal.

The argument presented by Price was similar to that of CLSA. Coal stocks have been heavily sold off over the past 12 months, and the fourth quarter of most years is a traditional time of re-stocking by coal consumers.

On balance, he said, there was more of an “upside risk” than a chance of further falls by coal mining companies.

But as with most investment bank forecasts, there was a sting (or two) in the tale of that upbeat view. It started with concern about the unknown potential of tight-gas production in the US and the potential of the technology to spread worldwide. Chinese demand for metallurgical coal also fell into the basket of unknown factors.

UBS, Price said, was optimistic about the short-term outlook for thermal coal, tipping a price recovery to $105-$110 a tonne. However, the longer-term view was less optimistic, with the price reverting to about $90 a tonne over the next few years.

Metallurgical coal – thanks to “ballooning” production in countries such as Mongolia, Mozambique and Colombia – would face greater negative price pressures. And while Australia was easily the world’s biggest source of seaborne traded steel-making coal, it was also at the high end of the cost curve.

For investors, the views of CLSA and UBS signal an opportunity to get aboard a sector of the mining industry that has probably fallen as far as it should, with up the next direction.

For coal miners, the prospect of higher share prices is some comfort after 12 difficult months, though it also seems that a long-term recovery in the price of coal could be some way off, meaning tight cost controls will remain an important part of management planning.