FORTUNE -- If you are worried that inflation might soon soar and you want to protect your 401(k), here's an investing tip: Buy uranium. At least that seems to be the thinking of one of the top officials at the Federal Reserve.
In early February, the Federal Reserve revealed for the first time the portfolios of the presidents of the Fed's regional banks. Unlike Fed governors, the bank presidents don't get a regular vote on whether the short-term interest rates set by the Fed should go up or down. But they are the Fed's top ranking regional officials, leading the Fed's efforts in monitoring the economy around the country and regulating local banks. So they should have better insight into where the economy is headed than the rest of us. Or so you would think.
Which is why the investment portfolio of Richard Fisher, the head of the Federal Reserve Bank of Dallas is interesting, and perhaps worrying. For the most part, the presidents' portfolios are what you would expect for relatively wealthy Americans - a mix of stocks and bonds and mutual funds. Among the stock picks of the Fed presidents are Apple (AAPL), Boeing (BA), Coca-Cola (KO) and JetBlue (JBLU). Generally, the portfolios of the Fed presidents are positioned to do well when the U.S. economy does well.
But Fisher is the one exception. Fisher's portfolio includes 7,000 acres of land in Texas, Georgia, Iowa and Missouri; a $1 million investment in a fund that tracks the price of gold; and as much as $250,000 worth of uranium. He has also at times invested in funds that rise in value when the stock market falls.
Fisher has a large portfolio - $21 million - and the ethics officer at the Dallas Fed is careful to say that Fisher doesn't select his actual investments. That's done by an outside broker. Nonetheless, Fisher has been one of the most outspoken critics of the Fed's own current low-interest-rate policy. He thinks Bernanke policies could setting us up for a big jump in inflation, even if there appears to be little sign of that yet (and price increases have actually been slowing lately). And Fisher's portfolio seems to confirm his fears about the economy, and inflation in particular. Commodities, metals - gold in particular - and real estate, are traditionally seen as a good inflation hedges. Still, even among those who worry about inflation, uranium is an unusual pick.
One reason is because you can't own the actual metal. Storing radioactive materials in your house is generally frowned upon by neighbors. Fisher owns shares in a company called Uranium Participation Corp., which is based in Canada and generally tracks the value of the metal, much like an ETF. Still, uranium hasn't had the run up that gold or other traditional inflation hedges have had in recent years, which is why uranium could be a good pick now, but not because it will protect you against inflation.
In fact, it hasn't. Early last year, when oil prices, commodities and prices in general, though more modestly, were heading up, uranium was going in the opposite direction: Down. That's because of the Japanese tsunami and resulting nuclear disaster. The primary use of uranium is to fuel nuclear reactors, and it appears the price of uranium is more tied to the projected future use of nuclear fuel than inflation. So when the Japanese disaster raised concerns about the safety of nuclear reactors, and predictions that some countries would abandon using them, the price of uranium fell by about a third in 2011 to a low of $49 a pound. It recently was priced at $52.
Still, if you are worried about the growth of U.S. economy, uranium could be a good way to play emerging markets, particularly China and India. Casey Research's Marin Katusa, who is one of the few energy analysts who follows uranium, says he thinks prices of the radioactive metal could jump 50% in the near future. There are currently 440 working nuclear power plants in the world. China is planning to add 200 reactors to that nation's energy infrastructure. India could add as many as 60 reactors. Russia another 50 or so. Not all of these will be built. But the point is that uranium should be in more demand. So uranium could very well end up being a good call for Fisher, even if his prediction that inflation will take off is not.
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