DislikedCurrencyMan, thank you, thank you for the voucher and thank you for offering your help. I am your humble follower who appreciate and read your many contributions to this thread.
On the same token I must say I would probably never contribute to any thread/forum without the oversight to ensure respect and order as provided by PipTrapper. Thank you. There are not too many public places where you can have an adult exchange of views like here.
My viewpoint on Gold and EURUSD fundamentals might differ from the mean of this thread (not necessarily...Ignored
I respectfully have to debate you on this one. What you are talking about is covert currency pegging (although loosely). I will try to explain why that cannot work without transparency.
1. Everything central banks do to manipulate currency value can never be kept a secret for a long time. It is not often that the monetary policy makers 100% agree on policy. Furthermore, I cannot and will never believe that all central bankers are corrupt enough to collude in such schemes. Maybe a few of them are... maybe even Bernanke and Draghi are. However, with so many participants in the system, there is bound to be a whistleblower at some point.
2. The main ingredient of hard or loose currency pegging is communication followed by a reputation of putting their money where their mouth is. I'll give you two examples. The first is the Swiss National Bank. They called a floor of 1.20 Francs to the Euro and they put billions behind that call to show the market they meant business. Since then the floor has held solidly and no large speculative trader dares to challenge it. The second example is the Bank of Japan. They are not as successful as the SNB, but their objective was achieved nonetheless. In their case they have not mentioned any specific floor, but still large speculators refuse to challenge it. So, if with all that communication, it still cost Switzerland and Japan billions upon billions to defend the peg, how much do you think it would cost to defend an uncommunicated peg? A central bank, no matter which one, cannot embark on a covert floor/peg of their currency without knocking their foreign reserve ratios so far out of whack that it would become immediately apparent to everyone.
3. Admittedly it is currently in the US's interests to maintain a weaker than normal USD. Heck some even say that it is unspoken US policy to gradually debase the USD over time... quietly and consistently. That may be true. However, in order to convince me that there is some collusion between the Fed and the ECB to regulate the exchange rate, you would first have to convince me that the ECB wants a stronger Euro. With the Eurozone facing so many economic and political headwinds, it is also in the EZ's best interests to have a weaker Euro (Sub 1.20). Without that, the Eurozone growth prospects will be stunned for decades. Therefore the Fed and the ECB have conflicting agendas when it comes to exchange rates. What we have here is more likely a race to debase and not some cooperation between the two banks. Even if there was in fact some kind of cooperation, it would not succeed without being made public simply because of what I laid out in items 1 and 2 above.
Food for thought
Those who say it cannot be done should not interrupt those who are doing it