The novel opens with Santiago thinking about his sheep. What does he observe about their existence?

Santiago
makes some critical observations about the condition of sheep.  One such observation is that the
sheep follow the "herd."  They move as a group, rarely breaking off from the group to
go on their own.  This bears connection to Santiago's own life as he is in the midst of a
"dark wood" in which he must decide to follow the life of the "herd" (being
a priest and making his father and his adherence to social conventions happy) or going out on
his own and traveling.  Santiago also thinks about the loyalty of the sheep.  They blindly
follow what Santiago says without much in way of regard for their own choices and sense of
autonomy. It is here in which Santiago is disturbed at how easily he could kill one after
another and they would not be disrupted.  

Such a thought process disturbs
him and it is here in which Santiago ends up making his most critical observation.  He observes
that the sheep are only concerned with their own subsistence.  They eat and drink and that is
about it.  For Santiago, this becomes an elemental notion of human existence.  Santiago's
thoughts begin to move into the realm of whether this is really all human beings are meant to do
in terms of only being concerned with the present, that which is in front of them.  For
Santiago, this construction of reality denies the ability to dream and to reconfigure what is
into what can be.  These thoughts about the sheep end up coming back to Santiago's state of
being in the world and what needs to be done about it.  Santiago comes back to this when he
recognizes that his condition in the world is one in which he is poised "between my flock
and my treasure."  His thoughts about the sheep help to develop this
understanding.