Best of the Week
Most Popular
1. US Housing Market Real Estate Crash The Next Shoe To Drop – Part II - Chris_Vermeulen
2.The Coronavirus Greatest Economic Depression in History? - Nadeem_Walayat
3.US Real Estate Housing Market Crash Is The Next Shoe To Drop - Chris_Vermeulen
4.Coronavirus Stock Market Trend Implications and AI Mega-trend Stocks Buying Levels - Nadeem_Walayat
5. Are Coronavirus Death Statistics Exaggerated? Worse than Seasonal Flu or Not?- Nadeem_Walayat
6.Coronavirus Stock Market Trend Implications, Global Recession and AI Stocks Buying Levels - Nadeem_Walayat
7.US Fourth Turning Accelerating Towards Debt Climax - James_Quinn
8.Dow Stock Market Trend Analysis and Forecast - Nadeem_Walayat
9.Britain's FAKE Coronavirus Death Statistics Exposed - Nadeem_Walayat
10.Commodity Markets Crash Catastrophe Charts - Rambus_Chartology
Last 7 days
AMD Ryzen 4900x / 5900x and 4950x / 5950x Zen3 4th Gen IPC and Clock Speed and Core Specs - 14th Aug 20
Stock Market Gap Fills Suggests Market Momentum May Stall - 14th Aug 20
Silver May Be Overextended – But It’s STILL Cheap - 14th Aug 20
A Short Guide To Making Your First Stock Market Investment - 14th Aug 20
Is Tech Reality Affects our Dating Possibilities? - 14th Aug 20
Will You Make Money in the New Silver Bull Market ? - 13th Aug 20
Hyper-Deflation Capital Destruction And Gold & Silver - 13th Aug 20
Stock Market Correction Approaching - 13th Aug 20
Silver Took the Stairs to $21 in 2008, Took Escalator to $29 2010. Is Silver on Elevator to 120th floor today? - 13th Aug 20
President Trump Signs Additional COVID Relief – What To Expect from the Markets - 13th Aug 20
Has Gold's Upward Drive Come to an End? - 13th Aug 20
YouTuber Ads Revenue & How to Start a Career on YouTube - 13th Aug 20
Silver Notches Best Month Since 1979 - 12th Aug 20
Silver Shorts Get Squeezed Hard… What’s Next? - 12th Aug 20
A Tale of Two Precious Metal Bulls - 12th Aug 20
Stock Market Melt-Up Continues While Precious Metals Warn of Risks - 12th Aug 20
How Does the Gold Fit the Corona World? - 12th Aug 20
3 (free) ways to ride next big wave in EURUSD, USDJPY, gold, silver and more - 12th Aug 20
A Simple Way to Preserve Your Wealth Amid Uncertainty - 11th Aug 20
Precious Metals Complex Impulse Move : Where Is next Resistance? - 11th Aug 20
Gold Miners Junior Stcks Buying Spree - 11th Aug 20
Has the Fed Let the Inflation Genie Out of the Bottle? - 10th Aug 20
The Strange Food Trend That’s Making Investors Rich - 10th Aug 20
Supply & Demand For Money – The End of Inflation? - 10th Aug 20
Revisiting Our Silver and Gold Predictions – Get Ready For Higher Prices - 10th Aug 20
Storm Clouds Are Gathering for a Major Stock and Commodity Markets Downturn - 10th Aug 20
A 90-Year-Old Stock Market Investment Insight That's Relevant in 2020 - 10th Aug 20
Debt and Dollar Collapse Leading to Potential Stock Market Melt-Up, - 10th Aug 20
Coronavirus: UK Parents Demand ALL Schools OPEN September, 7 Million Children Abandoned by Teachers - 9th Aug 20
Computer GPU Fans Not Spinning Quick FIX - Sticky Fans Solution - 9th Aug 20
Find the Best Speech Converter for You - 9th Aug 20
Silver Bull Market Update - 7th Aug 20
This Inflation-Adjusted Silver Chart Tells An Interesting Story - 7th Aug 20
The Great American Housing Boom Has Begun - 7th Aug 20
Know About Lotteries With The Best Odds Of Winning - 7th Aug 20
Could Gold Price Reach $7,000 by 2030? - 6th Aug 20
Bananas for All! Keep Dancing… FOMC - 6th Aug 20
How to Do Bets During This Time - 6th Aug 20
How to develop your stock trading strategy - 6th Aug 20
Stock Investors What to do if Trump Bans TikTok - 5th Aug 20
Gold Trifecta of Key Signals for Gold Mining Stocks - 5th Aug 20
Stock Market Uptrend Continues? - 4th Aug 20
The Dimensions of Covid-19: The Hong Kong Flu Redux - 4th Aug 20
High Yield Junk Bonds Are Hot Again -- Despite Warning Signs - 4th Aug 20
Gold Stocks Autumn Rally - 4th Aug 20
“Government Sachs” Is Worried About the Federal Reserve Note - 4th Aug 20
Gold Miners Still Pushing That Cart of Rocks Up Hill - 4th Aug 20
UK Government to Cancel Christmas - Crazy Covid Eid 2020! - 4th Aug 20
Covid-19 Exposes NHS Institutional Racism Against Black and Asian Staff and Patients - 4th Aug 20
How Sony Is Fueling the Computer Vision Boom - 3rd Aug 20
Computer Gaming System Rig Top Tips For 6 Years Future Proofing Build Spec - 3rd Aug 20
Cornwwall Bude Caravan Park Holidays 2020 - Look Inside Holiday Resort Caravan - 3rd Aug 20
UK Caravan Park Holidays 2020 Review - Hoseasons Cayton Bay North East England - 3rd Aug 20
Best Travel Bags for 2020 Summer Holidays , Back Sling packs, water proof, money belt and tactical - 3rd Aug 20
Precious Metals Warn Of Increased Volatility Ahead - 2nd Aug 20
The Key USDX Sign for Gold and Silver - 2nd Aug 20
Corona Crisis Will Have Lasting Impact on Gold Market - 2nd Aug 20
Gold & Silver: Two Pictures - 1st Aug 20
The Bullish Case for Stocks Isn't Over Yet - 1st Aug 20
Is Gold Price Action Warning Of Imminent Monetary Collapse - Part 2? - 1st Aug 20
Will America Accept the World's Worst Pandemic Response Government - 1st Aug 20
Stock Market Technical Patterns, Future Expectations and More – Part II - 1st Aug 20
Trump White House Accelerating Toward a US Dollar Crisis - 31st Jul 20
Why US Commercial Real Estate is Set to Get Slammed - 31st Jul 20
Gold Price Blows Through Upside Resistance - The Chase Is On - 31st Jul 20
Is Crude Oil Price Setting Up for a Waterfall Decline? - 31st Jul 20

Market Oracle FREE Newsletter

How to Get Rich Investing in Stocks by Riding the Electron Wave

Gold and Silver and the Paradox of Over-Optimization

Commodities / Gold and Silver 2014 Mar 07, 2014 - 05:29 PM GMT

By: Dr_Jeff_Lewis


Disaster, by over-optimization, is another important way to frame the much-heralded "just in time" inventory practices which are used broadly by industry and grafted to monetary assets like precious metals.

The overgrowth of the financial system and serial bailouts are akin to allowing fuels to build up in the forest, preventing the natural burn off needed to replenish the soil and pave the way for new growth. Superficially, intentions are certainly good. But many suffer despite the well-intended. No one wants to see suffering or be held responsible for it for even a microsecond.

The modern world and the West in particular are extremely over-optimized and, therefore, dependent on a fragile array of artificial systems and networks. The degree of over-optimization can be measured by relative impact of the average developed world household losing power for a few hours or a day.

And we can see this growing process fracturing on many levels. The weakness comes from physical resource and the proximity of key inputs scarcity. Most of you are aware of the brittle reliance on a tiny physical "float" of available silver for industrial processes. We are one rumor away from a shortage that would create panic and wreak havoc across the spectrum.

We observe the phenomenon over a many industries, albeit with different manifestations.

Suburban sprawl has uprooted and disconnected vast segments of modern societies. We have stretched the commute time for what is left of the workforce. We have also added dependency on liquid fuels while selling and subsidizing an asset for a bloated financial system by creating debt.

The causality is certainly not linear, but liquid fuel consumption depends on a vast network of delivery operations that also happen to run on credit, which is in large part supplied by the very same financial institutions.

Similar delivery operations are responsible for the constant delivery of food and water far from the source.

Crisis and bailouts have led to massive consolidation in banking and finance, which has reduced the redundancy necessary to enable the efficient flow of credit and money. It is not difficult to imagine a long list of potential disruptions that could very quickly bring these extended networks and the people who rely on them to their knees.

Health and medicine have also succumbed to the same over-optimization - from pharmaceutical development and production and hospital administration to how care is delivered. Even the philosophy of medicine has fallen victim, where the standard of care evolves inwardly and often fails to identify risk on the front lines.

Over-optimization and Silver Duality

Turning to the poster child for how far we've gone down the proverbial rabbit hole in the fragilizing of finance, we can turn to silver.

Precious metals naked shorting is just another streamlined way to pick up nickels in front of a steamroller. Do it on a large enough scale and with some form of subsidy, margin, or grantee, and it can be a massive business unto itself. That is, until it explodes and spills over into the densely connected network of other paper derivative structures. This is part of why it is never absurd to consider that the tiny silver market can be the Achilles heel that might take down the system. Everything is tied and the trigger could come from any place along the tangled web.

Paper trading is a form of borrowing by not having primary exposure to underlying metal or asset. Price management not only serves the profit centers, but it also has the curious and optimizing effect of negating the macro picture - at least temporarily. Obviously, this is occurring to a degree in all markets, especially equities which have been prone to and infested by high frequency trading for the longest.

Financial System will break what's left of the economy. The problem is that many assume that we can rebuild what we have today overnight. That another bailout will reflate the infrastructure underlying physical and social cohesiveness.

Out over optimization has made this impossible. And complex systems bloated with fragility are as unpredictable as they are in fixable when they break.

If one looks long enough, it almost seems that miraculous systems so complex could have evolved to begin with. Or that it doesn't break down more often. That is the magic caused by over-optimization.

Of course, it goes much deeper on each of those levels, leaving a potential gulf that most could never imagine - nor want to.

Considering how far wealthy societies could fall from any number of truly random events makes preparation seem a bit more fashionable. Sadly, our dominate information networks will very likely keep that trend "safely" sequestered from the mainstream.

The inverse of the fragile is the robust. The physical metal is most robust. We have the opportunity to prepare accordingly. And physical metal held in possession is a cheap option that can also be stored in a disaster kit.

For more articles like this, and/or for a breath of fresh silver market reality amidst the stench of denial and technically meaningless short term price obsessed madness, check out

By Dr. Jeff Lewis

    Dr. Jeffrey Lewis, in addition to running a busy medical practice, is the editor of

    Copyright © 2014 Dr. Jeff Lewis- All Rights Reserved Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.

Dr. Jeff Lewis Archive

© 2005-2019 - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.

Post Comment

Only logged in users are allowed to post comments. Register/ Log in

6 Critical Money Making Rules