Most Popular
1. It’s a New Macro, the Gold Market Knows It, But Dead Men Walking Do Not (yet)- Gary_Tanashian
2.Stock Market Presidential Election Cycle Seasonal Trend Analysis - Nadeem_Walayat
3. Bitcoin S&P Pattern - Nadeem_Walayat
4.Nvidia Blow Off Top - Flying High like the Phoenix too Close to the Sun - Nadeem_Walayat
4.U.S. financial market’s “Weimar phase” impact to your fiat and digital assets - Raymond_Matison
5. How to Profit from the Global Warming ClImate Change Mega Death Trend - Part1 - Nadeem_Walayat
7.Bitcoin Gravy Train Trend Forecast 2024 - - Nadeem_Walayat
8.The Bond Trade and Interest Rates - Nadeem_Walayat
9.It’s Easy to Scream Stocks Bubble! - Stephen_McBride
10.Fed’s Next Intertest Rate Move might not align with popular consensus - Richard_Mills
Last 7 days
US Presidential Election Year Stock Market Seasonal Trend - 29th Nov 24
Who controls the past controls the future: who controls the present controls the past - 29th Nov 24
Gold After Trump Wins - 29th Nov 24
The AI Stocks, Housing, Inflation and Bitcoin Crypto Mega-trends - 27th Nov 24
Gold Price Ahead of the Thanksgiving Weekend - 27th Nov 24
Bitcoin Gravy Train Trend Forecast to June 2025 - 24th Nov 24
Stocks, Bitcoin and Crypto Markets Breaking Bad on Donald Trump Pump - 21st Nov 24
Gold Price To Re-Test $2,700 - 21st Nov 24
Stock Market Sentiment Speaks: This Is My Strong Warning To You - 21st Nov 24
Financial Crisis 2025 - This is Going to Shock People! - 21st Nov 24
Dubai Deluge - AI Tech Stocks Earnings Correction Opportunities - 18th Nov 24
Why President Trump Has NO Real Power - Deep State Military Industrial Complex - 8th Nov 24
Social Grant Increases and Serge Belamant Amid South Africa's New Political Landscape - 8th Nov 24
Is Forex Worth It? - 8th Nov 24
Nvidia Numero Uno in Count Down to President Donald Pump Election Victory - 5th Nov 24
Trump or Harris - Who Wins US Presidential Election 2024 Forecast Prediction - 5th Nov 24
Stock Market Brief in Count Down to US Election Result 2024 - 3rd Nov 24
Gold Stocks’ Winter Rally 2024 - 3rd Nov 24
Why Countdown to U.S. Recession is Underway - 3rd Nov 24
Stock Market Trend Forecast to Jan 2025 - 2nd Nov 24
President Donald PUMP Forecast to Win US Presidential Election 2024 - 1st Nov 24
At These Levels, Buying Silver Is Like Getting It At $5 In 2003 - 28th Oct 24
Nvidia Numero Uno Selling Shovels in the AI Gold Rush - 28th Oct 24
The Future of Online Casinos - 28th Oct 24
Panic in the Air As Stock Market Correction Delivers Deep Opps in AI Tech Stocks - 27th Oct 24
Stocks, Bitcoin, Crypto's Counting Down to President Donald Pump! - 27th Oct 24
UK Budget 2024 - What to do Before 30th Oct - Pensions and ISA's - 27th Oct 24
7 Days of Crypto Opportunities Starts NOW - 27th Oct 24
The Power Law in Venture Capital: How Visionary Investors Like Yuri Milner Have Shaped the Future - 27th Oct 24
This Points To Significantly Higher Silver Prices - 27th Oct 24

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

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

Commodities

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 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 © 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

© 2005-2022 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