Best of the Week
Most Popular
1. Gold vs Cash in a Financial Crisis - Richard_Mills
2.Current Stock Market Rally Similarities To 1999 - Chris_Vermeulen
3.America See You On The Dark Side Of The Moon - Part2 - James_Quinn
4.Stock Market Trend Forecast Outlook for 2020 - Nadeem_Walayat
5.Who Said Stock Market Traders and Investor are Emotional Right Now? - Chris_Vermeulen
6.Gold Upswing and Lessons from Gold Tops - P_Radomski_CFA
7.Economic Tribulation is Coming, and Here is Why - Michael_Pento
8.What to Expect in Our Next Recession/Depression? - Raymond_Matison
9.The Fed Celebrates While Americans Drown in Financial Despair - John_Mauldin
10.Hi-yo Silver Away! - Richard_Mills
Last 7 days
INTEL (INTC) Stock Investing in AI Machine Intelligence Mega-trend 2020 and Beyond - 18th Jan 20
Gold Stocks Wavering - 18th Jan 20
Best Amazon iPhone Case Fits 6s, 7, 8 by Toovren Review - 18th Jan 20
1. GOOGLE (Alphabet) - Primary AI Tech Stock For Investing 2020 - 17th Jan 20
ERY Energy Bear Continues Basing Setup – Breakout Expected Near January 24th - 17th Jan 20
What Expiring Stock and Commodity Market Bubbles Look Like - 17th Jan 20
Platinum Breaks $1000 On Big Rally - What's Next Forecast - 17th Jan 20
Precious Metals Set to Keep Powering Ahead - 17th Jan 20
Stock Market and the US Presidential Election Cycle  - 16th Jan 20
Shifting Undercurrents In The US Stock Market - 16th Jan 20
America 2020 – YEAR OF LIVING DANGEROUSLY (PART TWO) - 16th Jan 20
Yes, China Is a Currency Manipulator – And the U.S. Banking System Is a Metals Manipulator - 16th Jan 20
MICROSOFT Stock Investing in AI Machine Intelligence Mega-trend 2020 and Beyond - 15th Jan 20
Silver Traders Big Trend Analysis – Part II - 15th Jan 20
Silver Short-Term Pullback Before Acceleration Higher - 15th Jan 20
Gold Overall Outlook Is 'Strongly Bullish' - 15th Jan 20
AMD is Killing Intel - Best CPU's For 2020! Ryzen 3900x, 3950x, 3960x Budget, to High End Systems - 15th Jan 20
The Importance Of Keeping Invoices Up To Date - 15th Jan 20
Stock Market Elliott Wave Analysis 2020 - 14th Jan 20
Walmart Has Made a Genius Move to Beat Amazon - 14th Jan 20
Deep State 2020 – A Year Of Living Dangerously! - 14th Jan 20
The End of College Is Near - 14th Jan 20
AI Stocks Investing 2020 to Profit from the Machine Intelligence Mega-trend - Video - 14th Jan 20
Stock Market Final Thrust - 14th Jan 20
British Pound GBP Trend Forecast Review - 13th Jan 20
Trumpism Stock Market and the crisis in American social equality - 13th Jan 20
Silver Investors Big Trend Analysis for – Part I - 13th Jan 20
Craig Hemke Gold & Silver 2020 Prediction, Slams Biased Gold Naysayers - 13th Jan 20
AMAZON Stock Investing in AI Machine Intelligence Mega-trend 2020 and Beyond - 11th Jan 20
Gold Price Reacting to Global Flash Points - 11th Jan 20
Land Rover Discovery Sport 2020 - What You Need to Know Before Buying - 11th Jan 20
Gold Buying Precarious - 11th Jan 20
The Crazy Stock Market Train to Bull Eternity - 11th Jan 20
Gold Gann Angle Update - 10th Jan 20
Gold In Rally Mode Suggests Commitment of Traders (COT) Data - 10th Jan 20
Disney Could Mount Its Biggest Rally in 2020 - 10th Jan 20
How on Earth Can Gold Decline During the U.S. – Iran Crisis? - 10th Jan 20
Getting Your HR Budget in Line - 10th Jan 20
The Fed Protects Gamblers at the Expense of the Economy - 9th Jan 20
Last Chance to Get Microsoft Windows 10 for FREE! - 9th Jan 20
The Stock Market is the Opiate of the Masses - 9th Jan 20
Is The Energy Sector Setting Up Another Great Entry? - 9th Jan 20
The Fed Is Creating a Monster Bubble - 9th Jan 20
If History Repeats, Video Game Stocks Could Soar 600%+ - 9th Jan 20
What to Know Before Buying a Land Rover Discovery Sport in 2020 - 8th Jan 20
Stock Market Forecast 2020 Trend Analysis - 8th Jan 20
Gold Price at Resistance - 8th Jan 20
The Fed Has Quietly Started QE4 - 8th Jan 20
NASDAQ Set to Fall 1000pts Early 2020, and What it Means for Gold Price - 8th Jan 20
Gold 2020 - Financial Analysts and Major Financial Institutions Outlook - 8th Jan 20
Stock Market Trend Review - 8th Jan 20

Market Oracle FREE Newsletter

Nadeem Walayat Financial Markets Analysiis and Trend Forecasts

Silver Tales of Thales 

Commodities / Gold and Silver 2015 Mar 20, 2015 - 09:01 AM GMT

By: Dr_Jeff_Lewis

Commodities

Physical silver held in personal possession is a cheap option; an option being simply a choice. The best choices have a very low downside —and infinite upside. Options and optionality are not exclusive to financial markets. 

Silver, mainly because its price is dominated by commercial investment bank goliaths, has massive asymmetry. It’s super cheap relative to its real supply and demand fundamentals. All it needs is a storm to disrupt that hold. That storm is inevitable. 


Nasim Taleb’s recent book, “Antifragile”, examines the concept of optionality in his elaboration of the idea that anti fragile options are those that benefit or grow from chaos and disorder.

From its historical ancient role as money and the basis for credit to its modern day strategic importance and constant price suppression, physical silver fits the bill in the great pursuit of the anti-fragile payoff.

Taleb defines the anifragile payoff as:

To get all of the advantages of wealth (the most important one being independence and the ability to only occupy your mind with matters that interest you) but not its side effects such as having to attend a black-tie charity event and being forced to listen to a polite exposition of the details of the marble rich house renovation. The worst side effect of wealth as social associations, it forces on its victims as people with big houses to end up socializing with other people with big houses beyond a certain level of opulence and independence (gents tend to be less and less personable and their conversation less and less interesting). - Nassim Taleb, “The Antifragile Payoff”

To illustrate the classic use of optionality, Taleb invokes the ancient story of Thales and its link to asymmetry. 

The story of Thales adapted from Wikipedia:

Thales, so the story goes, because of his poverty was taunted with the uselessness of philosophy; but from his knowledge of astronomy he had observed while it was still winter that there was going to be a large crop of olives. So he raised a small sum of money and paid round deposits for the whole of the olive-presses in Miletus and Chios, which he hired at a low rent as nobody was running him up. And when the season arrived, there was a sudden demand for a number of presses at the same time and by letting them out on what terms he liked, he realized a large sum of money. So proving that it is easy for philosophers to be rich if they choose, but this was not what they cared about. Thales then is reported to have thus displayed his wisdom but as a matter of fact, this device of taking an opportunity to secure a monopoly is a universal principle of business. Hence, even some states have recourse to this plan as a method of raising revenue; when short of funds, they introduce a monopoly of marketable goods. There was a man in Sicily who used a sum of money deposited with him to buy up all the iron from the iron mines, and afterwards when the dealers came from the trading-centers he was the only seller, though he did not greatly raise the price. But all the same he made a profit of a hundred talents on his capital of fifty. When Dionysius came to know of it he ordered the man to take his money with him but clear out of Syracuse on the spot, since he was inventing a means of profit detrimental to the tyrant's own affairs. Yet really this device is the same as the discovery of Thales, for both men alike contrived to secure themselves a monopoly. 

Silver is everyman’s little potential monopoly - securing a scarce commodity, ethically, without the intention of controlling the price but surviving a securing wealth in preparation for the demise of the greedy.

Physical silver will never go bankrupt. This is the heart precious metals and it needs no dividend because there is not this ultimate risk of complete insolvency. 

Conversely, silver has a potentially infinite upside - starting with its severe, decades long mis-pricing and ending with its ancient monetary role, status or function against the backdrop of out of control money printing.

Thales was simply humble philosopher that people laughed at, somewhat parallel with the everyman. Silver is just an option — one that at some point will pay off. Thales could not predict the weather and neither can we. You don’t need to look at the stars to see the storm coming. The signs are all around you. 

The world has gone mad — the build up of debt, corruption, misallocation of capital, contraptions of power and no limit on spending make the financial system exceedingly fragile, subject to destruction that cannot be fixed.

You don’t need to read the weather like Thales— the equivalent is looking at the supply and demand data, the nature of the turnover, and price discovery. Then all you have to do is maintain a position and hold on for the ride. Then you take possession of your little monopoly and sell it or trade later for a much higher price 

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 http://www.silver-coin-investor.com

By Dr. Jeff Lewis

    Dr. Jeffrey Lewis, in addition to running a busy medical practice, is the editor of Silver-Coin-Investor.com

    Copyright © 2015 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 http://www.MarketOracle.co.uk - 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