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Silver and Gold - We Cant Understand It

for Them

The Illusion of Explanatory Depth


For years I have calmly, patiently, and for the most part rationally, listened to
friends, family, patients, and colleagues grapple with the notion of precious
metals.
The majority understand the basic reasons why some portion of portfolio
allocation is necessary or prudent, but very few have (or will) taken action.
Often, people are shocked that I would be interested in the matter to begin with.
I think subconsciously people understand to be a Doctor is to be a teacher, but
on the surface most people find it odd and uncomfortable to accept my interest
and quest in something that rarely occurs to them.
Occasionally, there will be debate. I dont necessarily look for them. Experience
with humans of all ages and from all walks of life has afforded me a healthy dose
of humility. But Im happy and proud to go as far as anyone would like about
money, finance and especially silver.
No matter how tempting it is, no matter how strong the need is to be right and
to feel vindicated, it is normally fruitless. I dont know where I first heard it, but
one of my favorite expressions has become:
I can explain it to you, but I cant understand it for you.

Understanding requires a shift. One that, I feel myself almost cringing to admit,
involves emotional intelligence. This goes against all rational logic.
Most people are polite. And Ill admit to a tendency for avoiding conflict
especially given the context in which many of these (potential) debates typically
arise.
I came across the following article by accident some time back. It immediately
resonated with my own experience in wrestling with my own beliefs, but also the
beliefs, world views, and opinions of people I care about.
And collectively speaking, the opinions and views of anyone with a pulse who
cares about financial safety, justice, and wealth.
You are, Im afraid to say, mistaken. The position you are taking makes no logical
sense. Just listen up and Ill be more than happy to elaborate on the many, many
reasons why Im right and you are wrong. Are you feeling ready to be convinced?
Whether the subject is climate engineering, the Middle East or forthcoming
holiday plans, this is the approach many of us adopt when we try to convince
others to change their minds. Its also an approach that, more often than not,
leads to the person on the receiving end hardening their existing position.
(Ed. For the subject of money and wealth, at the root lies the fear of loss more
powerful than the want of profit. People will do anything, and convince themselves
of practically anything, to avoid loss.)
Fortunately, research suggests there is a better way one that involves more
listening and less trying to bludgeon your opponent into submission.
A little over a decade ago Leonid Rozenblit and Frank Keil from Yale University
suggested that in many instances people believe they understand how something
works when in fact their understanding is superficial at best.
They called this phenomenon the illusion of explanatory depth.
They began by asking their study participants to rate how well they understood
how things like flushing toilets, car speedometers and sewing machines worked
before asking them to explain what they understood and then answer questions
on it.
The effect they revealed was that, on average, people in the experiment rated
their understanding as much worse after it had been put to the test.

What happens, argued the researchers, is that we mistake our familiarity with
these things for the belief that we have a detailed understanding of how they
work.
(Im sure youve experienced this with the topic of money and currency. We use
the terms interchangeably, though they are very different in reality. Ill never
forget the transformation I witnessed in a Bitcoin aficionado arriving from the
technological side of things coming to grips with the store of wealth versus
currency.)
Usually, nobody tests us and if we have any questions about them we can just
take a look. Psychologists call this idea that humans have a tendency to take
mental shortcuts when making decisions or assessments the cognitive miser
theory.
Why would we bother expending the effort to really understand things when we
can get by without doing so? The interesting thing is that we manage to hide from
ourselves exactly how shallow our understanding is.
Its a phenomenon that will be familiar to anyone who has ever had to teach
something. Usually, it only takes the first moments when you start to rehearse
what youll say to explain a topic (or worse, the first student question) for you to
realize that you dont truly understand it.
All over the world, teachers say to each other I didnt really understand this until
I had to teach it. Or as researcher and inventor Mark Changizi quipped: I find
that no matter how badly I teach I still learn something.
Explain Yourself
Research published last year on this illusion of understanding shows how the
effect might be used to convince others they are wrong.
The research team, led by Philip Fernbach of the University of Colorado, reasoned
that the phenomenon might hold as much for political understanding as for things
like how toilets work.
Perhaps, they figured, people who have strong political opinions would be more
open to other viewpoints, if asked to explain exactly how they thought the policy
they were advocating would bring about the effects they claimed it would.
Recruiting a sample of Americans via the internet, they polled participants on a
set of contentious U.S. policy issues, such as imposing sanctions on Iran,
healthcare and approaches to carbon emissions.

One group was asked to give their opinion and then provide reasons for why they
held that view. This group got the opportunity to put their side of the issue, in
the same way anyone in an argument or debate has a chance to argue their case.
Those in the second group did something subtly different. Rather than provide
reasons, they were asked to explain how the policy they were advocating would
work. They were asked to trace, step by step, from start to finish, the causal path
from the policy to the effects it was supposed to have.
The results were clear. People who provided reasons remained as convinced of
their positions as they had been before the experiment. Those who were asked
to provide explanations softened their views, and reported a correspondingly
larger drop in how they rated their understanding of the issues.
With some things, softening views open the way for deeper understanding and a
renewed conviction. One that becomes immune to outside pressures. But
softening is a misleading term. The softening comes as a result of work and of
thinking. And in many cases, a difficult challenge to preconceived notions.
For example, the majority of people in our camp including myself have a
difficult time grappling with the fact that price action drives the commentary.
The root of how and for which direction markets trade in our modern financial
system is rigged. Everything else is a manifestation of that. Including what is left
of the broken organic economy that lies hidden within.
People who had previously been strongly for or against carbon emissions trading,
for example, tended to became more moderate ranking themselves as less
certain in their support or opposition to the policy.
(Again, experience shows that the deeper down the rabbit hole one goes with
centrally designed policy, the more conflicts of interest shed a darkness all
around.)
So this is something worth bearing in mind next time you find yourself trying to
convince a friend that we should build more nuclear power stations, that the
collapse of capitalism is inevitable, or that dinosaurs co-existed with humans
10,000 years ago.
Interesting analogy the author chooses.
Perhaps one might explain to him how the current collapse of capitalism began
long ago.

Just remember, however, theres a chance you might need to be able to explain
precisely why you think you are correct. Otherwise you might end up being
the one who changes their mind.
Ironically, the main reason I think Im correct about silver and precious metals is
precisely because of this phenomenon spread out collectively in the mass illusions
of todays society and culture.
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