If you’re not having trouble sleeping lately, it’s because you aren’t paying attention to the current state of global finances.  These are anything but normal times.  Please review last week’s column for the ongoing gory details.

This crisis may well pass, just as did the 1987 stock meltdown, the 1998 Long Term Capital Management hedge fund catastrophe, and the 2000 dotcom bust.  It could also turn into a replay of 1931.  It’s that serious.

What we’re seeing are the results of a failed system in its terminal stages.  Whether or not the particular events we’re experiencing become just another historical speed bump or the coup de grace to the entire edifice, it is obvious where we’re eventually heading.

What you now see is the culmination of 36 years of fraudulent money (Nixon removed gold backing for the dollar in 1971).  Recent excesses have been desperate acts of unadulterated greed to keep the system alive, though it’s on life support.

Einstein had an interesting definition of the word insanity: doing the same act over and over and expecting different results.  The Fed and international central banks are pumping out unprecedented liquidity (debt) in order to solve a problem caused by their excess debt in the first place.  It doesn’t take an Einstein to see their madness as well as the inevitable end result.

I promised in last week’s essay to give you my two favorite resource plays.  It’s really a no-brainer to me, and it’s directly connected to your sleep and your overall financial well being.  We’re talking physical gold and physical silver … in your possession.

I have received numerous questions from IDE readers as to exactly which forms of precious metals are most preferred.  I spent a lot of years without owning physical metals, as my concentration was exclusively on the exploration stocks.  The learning curve brought me back to the physical metals and it was a liberating experience.

Gold and silver have been used as money for centuries, in fact silver more so than gold.  They are known as monetary metals for good reason.  Platinum is considered by some to also fall in this same category.

None of these metals can be manufactured at a whim.  They represent honest currency; in fact, gold and silver are still mandated by the U.S. Constitution.  Both have been subject to official suppression because they are in direct competition to the fiat schemes.  Gold is the “anti-dollar” and silver follows in lock step.

Precious metals come in multiple forms that range from pure silver or gold coins to exotic paper derivatives based off the metals.  Today, I’ll briefly expound on the bullion coins and bars, which should serve as the foundation to any wealth portfolio.

A few decades back, it was widely considered prudent to allocate up to 15 percent of a portfolio to precious metals.  The official demonetization program has sent that prudent standard to the archives … temporarily.  Unimaginable debt, leverage, and weird financial engineering have since become the mainstays.

Bullion coins are coins that sell with slight premiums over the spot price of gold or silver.  U.S. Eagles are prime examples, as are Canadian Maple Leafs, South African Kruggerrands, Chinese Pandas, Australian Kangaroos, and a host of other coins.  These coins are produced in huge quantities by government decree.  With few exceptions, they are not likely to ever be scarce and thereby receive a scarcity premium.

Bullion bars are also worthy of consideration.  They are rectangular in form and can be purchased in a wide range of sizes.  They are made by recognized and regulated refineries.  Again, the bars should be bought with just a small premium above the spot price of the underlying metal.

Why buy and hold physical metal instead of utilizing some of the more “sophisticated” forms currently in vogue?  Two primary reasons come to mind.

First, should a crisis occur, you’ll have them readily available.  Second, I have long been a proponent of the idea that the monetary metals are under official suppression.  High-flying gold and silver prices serve to alert the populace that something has gone awry in the financial hierarchy.  Our central planners don’t want that to happen, so the periodic spankings are handed out.

The New York Comex futures market largely sets the world prices for gold and silver.  It is a complete sham as far as I’m concerned, and I’ll delve into that in coming articles.  Bluntly speaking, massive investment demand for physical metals as opposed to some of the other mentioned “paper” schemes would easily overwhelm and thwart this price manipulation.  If every gold and silver enthusiast insisted upon physical metal ownership, the price suppression game would end in a hurry.

Every historic attempt to distort the free market prices of precious metals has utterly failed.  It is a doomed strategy from the start.  You may want to search for the “London Gold Pool” from the 1960s for an example of how manipulation schemes tend to blow up spectacularly.  The current one is getting pretty long in the tooth.

I have long openly advocated purchasing physical precious metals as a way to end the suppression.  I have also long openly advocated that the NY markets be taken to task by stripping them of their unreliable inventories through demand for delivery.  Mine is a lonely position.

There are definitely other forms of precious metal investing that I like.  Future articles will expound upon these entities.  Still, if you believe in honest money and free markets, the foundation of your precious metals should be pretty, shiny, heavy, and readily available.  You’ll be astounded how much better you sleep!

It is always best to shop prices for bullion coins or bars.  Purchase them as close as possible to the “spot” price.  I also like what’s known as junk bags of silver.  These are pre-1963 U.S. silver coins that contain 90 percent silver.  You can frequently purchase them at quite low premiums over the daily silver price.

Silver and gold offer safety and protection from the reckless and failing fiat system.  Both metals are poised to rise spectacularly in the coming years.  They are perfect for turbulent times like we now face.  Sleep on it.

Invest Resourcefully,

Rusty