Sharp swings in precious metal prices — from record highs in January to a steep late-month drop — are rattling markets and prompting questions about what it all means for everyday Connecticut residents. For those not tracking commodities markets day to day, a professor at the University of Connecticut said the impact may be less dramatic than headlines suggest.
Why gold surged — and why it fell
Rosa Y.C. Chen, a UConn professor and director of research and portfolio management at BFS Capital Management, said the recent surge in gold was driven less by current economic conditions and more by investor fears about what could come next.
“So when you look at gold prices, it has been going up steadily for at least a year and a half,” Chen said. “What has caused the short-term surge, if you will, was the concerns coming to a head with some comments by the administration about perhaps we want a weaker dollar.”
That prospect, she said, triggered a familiar investor reaction.
“Those are things that you buy to protect you from runaway inflation, not that we have it today, but these are all predictions of what might happen,” Chen said.
Market analysts note that gold often attracts investors during periods of uncertainty, but it can also retreat quickly when expectations shift.
Limited risk for pension funds
For Connecticut teachers, state workers and retirees, Chen said volatility in gold prices is unlikely to meaningfully affect pension stability.
“The average ownership of gold in portfolios is only about 3%,” she said. “If you have a pension fund that is invested, they're probably not heavily invested in gold, and therefore diversified portfolios get around some of this volatility.”
Because large institutional portfolios spread investments across asset classes, she said, “I don't think the listeners should worry that this volatility is going to hurt their pension.”
State finances unlikely to hinge on gold
Connecticut’s heavy reliance on tax revenue from high earners in finance can make market swings feel personal for residents concerned about state budgets. But Chen said gold’s turbulence is not where most wealth exposure lies.
“That could be true,” she said of broader market impacts, “but I would say that most of these, the wealthier citizens of Connecticut, are probably invested in stocks, more so than precious metals.”
As a result, she said, “the gold volatility probably is not affecting the vast majority of wealth.”
Silver and copper: different risks, different roles
Chen said investors often group precious metals together, but their economic roles vary widely.
“Copper is an industrial metal. It's not generally used as currency,” she said, noting its relatively low price compared with gold makes it impractical for most investors seeking a store of value.
Silver occupies a middle ground.
“Silver is an interesting metal because it's both an industrial metal as well as a precious metal,” Chen said. It is often seen as more accessible than gold — but also more volatile.
“It’s been called the poor man’s gold,” she said. “Gold and silver trade like traveling companions together. But there’s a lot more volatility associated with silver.”
For risk-averse investors, that distinction matters.
“If you don't like volatility and risk, you probably don't want to buy silver,” Chen said. “If you get the adrenaline rush, then I guess you can buy silver.”
What everyday residents should take away
While dramatic price moves can dominate financial headlines, Chen emphasized that most Connecticut residents will feel little direct impact from precious metal turbulence alone. For long-term investors and public pension beneficiaries, diversification — not commodity swings — remains the key stabilizing force.
