BOSTON ( TheStreet) -- Gold and silver have tagged nominal highs and the rally's catalyst remains firmly intact: Sovereign debt woes, in Europe and the U.S., increasingly resemble a no-win scenario. Extreme leverage by government entities has been satiated with austerity programs and liquidity solutions, with little or no work done to resolve the true issue of solvency. Greece and Portugal are suffering under unsustainable debt burdens, and Italy and Spain are the latest targets of bond-market vigilantes, who may soon turn to the U.S.As fear gains traction, it's wise to consider precious metal investments as a core portfolio holding. Among the greatest of fears is the contagion potential of eurozone defaults. With almost every bank in the eurozone carrying low-quality bonds, a restructuring --the technical term for default -- may plunge the global economy into an even more severe recession than in recent years. While investors continue to herd into theoretically risk-free Treasury bonds, informed investors such as Bill Gross have warned that the U.S. is, in fact, in a more precarious financial position than Greece as accounting for entitlement liabilities renders our national debt at $75 trillion, or even higher. Despite the bond guru's analysis, downgrade threats from every credible rating agency and a pending debt-ceiling breach (with no signs of political compromise), the 10-year Treasury yields a paltry 2.9%. Those who argue for efficient markets should consider the countless economic reasons to avoid Treasuries and then consider investor demand. Treasury appetite is purely psychological. If the debt crisis worsens, investors assume the U.S. is least likely to renege on its obligations. This isn't a quantitative methodology, nor is precious metals investment, but the correlation between fear and metals performance is established. Owning gold or silver is, in many ways, illogical. Despite the metals bulls arguments that the two commodities are "money," they, in fact, are not. U.S. retail outlets don't accept gold in exchange for goods, and a return to a so-called gold standard for fiat, or paper, currencies is extremely unlikely. Going further, the shiny metal has no economic utility -- it isn't required to make anything. It can't power a car or feed your family. (Silver has plenty of industrial applications, but it also is being bought based on the psychology of fear.) While the precious metals trend could quickly reverse, and it's counterintuitive to bandwagon top-performing investments, metals merit attention as debt dilemmas are unlikely to die.