According to an article in Monday's Wall Street Journal(subscription only), hedge funds have began to bet on the commodity uranium. This seems like a harmless activity at first, since uranium is not traded on any exchanges so the commodity must be bought and sold privately. Due to the huge increase in demand from hedge fund speculators, however, this extremely precious and important commodity has run up in price very significantly over the last several years ---- moving from $21 per pound two years ago to roughly $80 per pound in February. Therefore, according to the article, hedge funds are "exacerbating what was already the biggest nuclear-fuel supply crunch in decades."

The issue of hedge funds trading uranium raises two questions: 1) Where should the line be drawn regarding what hedge funds are able to speculate in? Is a very rare and illiquid commodity with very dangerous, radioactive characteristics going too far? and 2) Are returns that hard to find these days that hedge funds need to dabble in these extremely speculative and thinly traded instruments? If so, I think hedge fund investors and going to be very disappointed over the next few years.