Tags: Fed | President | buy | Uranium

This Fed President Thinks It’s Time to Buy Uranium

By    |   Tuesday, 14 Feb 2012 01:08 PM

Here's an investing tip if you want to follow the strategy of one of the top officials at the Federal Reserve: buy uranium now. Its price could explode as emerging markets build more nuclear reactors.

Richard Fisher, Dallas Federal Reserve chief, has a sizable amount of uranium in his portfolio, according to Fortune magazine.

Fisher has as much as $250,000 worth of uranium in his portfolio through Uranium Participation Corp., a Canadian company that tracks the value of uranium, much like an exchange-traded fund (ETF), Fortune reports.

Marin Katusa of Casey Research, an energy analyst following uranium, believes uranium prices might soon increase 50 percent as nuclear reactors proliferate in emerging markets, according to Fortune.

China wants to open 200 new reactors. India might add 60 reactors, and Russia could build about 50. The world now has 440 working nuclear reactors.

Even if not all of those reactors are built, demand for uranium should still increase.

The price of uranium fell by about a third to a low of $49 a pound last year after the Japanese earthquake caused one of the worst nuclear disasters.

Experts thought some nations would abandon nuclear energy after the disaster. Since then, uranium's price has recovered somewhat to $52 a pound.

Fisher has opposed the Fed's low-interest rate policy, arguing that it will lead to inflation down the road. His $21 million portfolio that's heavy on real estate and commodities like gold seems to indicate that he is worried about inflation, Fortune notes.

While investors typically hold commodities to protect themselves against inflation, uranium values depend more on its demand — that is, the prospects for nuclear energy — than inflation expectations, the article notes.

Uranium stocks have done well so far this year, and the industry is improving, according to Paragon Report, a research firm specializing in energy.

For instance, the Global X Uranium ETF, the first ETF to track companies involved in uranium mining, is up more than 20 percent this year after collapsing more than 50 percent in 2011.

According to Paragon Report, the world's largest uranium producer — Canadian-based Cameco — should benefit from a deal between China and Canada to ease exports of Canadian uranium to China.

China, it notes, intends to increase its use of nuclear power by 7 percent by 2020.

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2012-08-14
Tuesday, 14 Feb 2012 01:08 PM
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