Upon meeting Santiago, the dream interpreter takes his hands and begins chanting a Gypsy prayer. When he was a boy, Santiago feared being captured by gypsies, and he worries the fear will return. He takes solace in an image of Jesus in the room, but his hands still tremble. When Santiago realizes that the dream interpreter detects his nervousness, he pulls his hands away and says he doesn’t want a palm reading. The dream interpreter replies that she can help him, and that she will still charge him if he leaves early. Santiago decides to go ahead and explain his dream.
In his dream, Santiago is in a field with his sheep when a child starts to play with them. The child grabs Santiago’s hands, transports him to the pyramids in Egypt, and tells him that he will find a treasure near them. As the child begins to say the exact location of treasure, Santiago wakes up.
After listening to the dream, the dream interpreter says she will not charge him for her service, but that she wants ten percent of the treasure when he finds it. Santiago laughs in disbelief, and agrees to swear that he will share his treasure. Then the dream interpreter goes on to insist that Santiago travel to the Pyramids and find the treasure. She says that she knows the treasure really exists because it was a child who pointed it out in the dream. Skeptical, Santiago leaves disappointed but relieved he didn’t have to pay anything.
Santiago eats and buys a new book in Tarifa. He rests in town to wait out the hot sun before he moves on. He is reading when an old man who resembles an Arab approaches him. Santiago ignores the man initially, but the old man persistently questions Santiago about the book until Santiago relents and talks to him. To Santiago’s surprise, the old man knows the book. The old man says it is the same as most other books, because it describes how people end up believing “the world’s greatest lie,” that nobody can choose his own fate, or “Personal Legend.” Santiago says he controlled his destiny by becoming a shepherd instead of a priest.
During their conversation, the old man introduces himself as Melchizedek and says he is the King of Salem. Santiago has never heard of Salem and thinks the old man is crazy. The old man says that if Santiago gives him one tenth of his sheep, he will tell him how to find the hidden treasure. Santiago guesses the old man works with the dream interpreter in a Gypsy scam, since in no other way could he have known about the treasure. Melchizedek then proceeds to write the names of Santiago’s mother and father in the sand with a nearby stick—names Santiago never told the gypsy.
The first section of The Alchemist introduced Santiago as a happy and successful, if somewhat complacent, young shepherd. He does his job well, feels satisfied with his choices, and maintains a youthful crush on a local girl with exotic features. To Santiago, his life seems unique and barrier-breaking. In this section, however, he begins to feel that a whole world exists which he has not seen, and though Santiago may be something of an adventurer compared to his parents and the people around him, he may still resemble his sheep. During his meetings with the gypsy and Melchizedek, Santiago glimpses possibilities for his life that he had never considered, and the reader has some early hints that Santiago will have to choose between remaining a relatively adventurous Spanish shepherd and breaking out of his comfort zone to pursue his Personal Legend.