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The epic paradox, the statement by Pinocchio, "My nose will Grow now", has always captured my attention.
By always, I mean ever since this morning when I tried to find an illustration for the"paradox" theme of today's blog. I was actually considering using a mathemetical paradox that illustrates how 5 = 4, but I thought that would require far too much thinking for everyone involved.
That one really blows my mind and calls into question the very validity of certain mathematical operational theories.
Frankly, I couldn't care less about Pinocchio, for all I know, he doesn't even exist.
Why we spend so much time of that which doesn't exist is beyond me.
But that is the essence of a paradox. It's existence is outside of the universe of reality, yet somehow exists within that reality.
Spending so much time in the unreal reality can be very profitable, though. Just look at the trade in non-existent securities.
Welcome to the world of the short seller.
In many societies selling what you don't own is a crime. There may even be a Commandment against that sort of thing.
While not a paradox, per se, philosphers and theologians have long asked why it seems that the wicked prosper while in this life.
Take the example of those selling sliver short. They own no silver, sell what they don't own and are dancing all the way to the back.
Taking that to one further step of lunacy are the holders of the levearged short silver ETF. Now, admittedly, I've been one of those for about a week and am not complaining about being part of the paradox. Those shares are up 70% in 5 trading days.
Not only selling what you don't own, the people selling the security may not even own the silver and then, just for kicks, let's double the ante.
Instead of 2 times zero, the result is 2 times whatever.
I'm not saying that this is wicked behavior, for I certainly like to think that I lead a reasonably virtuous life. Albeit a bit more wealthy than 5 days ago.
Short sellers have long been reviled. If the general population knew what a short seller actually was, they would be right up there with lawyers for the top spot in the derogatory joke category.
Something's missing, though.
Oh, yeah. The silver.
Also missing is the common sense that would realize that the raising of margin requirements would at the very least have a short term adverse effect on the commodity's price. Especially in market fundamentals were already taking the price in a downward direction.
Also missing are all of the silver touters who were profiled on TV insisting the the price was still poised to move forward. They've been replaced by those that have insisted that they were well prepared for the inevitable bursting bubble.
Prepared, perhaps, but out of sight. These people seem to be very good at deconstructing prophecies. Simply evaluate present circumstances and work backward to see what position would have predicted the now known outcome and profess to have held the position.
Paradox, stupidity, blinded by greed. Take your pick, but it's amazing how quickly the Bin Laden story has been displaced by another bursting bubble.
And no one is clamoring to see photos of the holes being blasted through silver or the pieces of paper that puport to have a right to silver, and then some.