chapter 1-3

Santiago sits in the Plaza to read a book, where he meets an old man who is eager to strike up a conversation. It turns out that the old man not only knows how to read but has read the book that Santiago is struggling through. The man reveals himself to be Melchizedek, the King of Salem, and he introduces Santiago to what he calls "the world's greatest lie." The World's Greatest Lie states that fate prevents one from achieving his/her Personal Legend. Everyone has a Personal Legend, or something which he/she has wanted to achieve his/her entire life. Personal Legends come from the Soul of the World and this Soul of the World conspires to help everyone achieve them. Unfortunately, fear and routine get in the way. Melchizedek explains to Santiago that he appears to those who truly want to realize their Personal Legends: sometimes he appears as a stone, sometime he appears as a king. Melchizedek seems to be able to read Santiago's mind and promises to tell him about the treasure in his dream if he gives him one-tenth of his sheep.

Melchizedek is a fantastical character, who knows a positively supernatural amount of things about Santiago's personal life, has magical stones to offer, and claims to be able to turn himself into different things. In this way, The Alchemist shows a certain amount of affinity with magical realism - a genre of literature wherein fantastic things happen but the characters react to them in psychologically realistic ways. This magical tone is one of the dominant stylistic characteristics of the novel.