"The Federal Reserve Board affects the federal funds rate by using open market operations, which is the purchase and sale of Treasury securities. If it wants to inject money into the economy, then it buys bonds, which also lowers interest rates. If it wants to lower the money supply, it sells bonds, which raises interest rates."

Money is also printed by the United States Mint, which is a division of the Department of the Treasury.

The United States Bureau of Engraving and Printing, which is another division of the Department of the Treasury, prints the paper money.

The Bureau of the Public Debt, which is yet another division of the Treasury, prints all debt-financing instruments of the U.S. federal government.

So, if government policy is to spend and print money, it is a combo of the Department of the Treasury (under John Snow) and the Federal Reserve Bank (under Alan Greenspan and soon to be Ben Bernanke), that prints the money. Too many people think it is just the Fed that does that.

In my experience, never have I seen such a close relationship exist between the Federal Reserve Bank and the White House. Normally, it is the Congress plus the Treasury Secretary, who reports to the President, who spend and print, and the Fed, who act as separate controllers, who stabilize prices via changes to monetary policy.

What I can see is an Administration that is hell-bent to reduce or at least contain tax increases at the same time as they use the printing presses to replace the fiscal (tax) revenues that otherwise would be raised, in order to (i) meet the debts of government, and (ii) feed money into the system to crank the economy into a higher gear. At the same time, the Administration is pressuring the Fed to be more accommodative to credit.

So everybody is spending and printing, and the result is that traders have decided to hedge their concerns by taking out an insurance policy in the form of precious metals, including gold.

Since the U.S. Administration is set in their strategy and tactics, so too are traders who are trying to protect their wealth. Tomorrow at 4:30pm, the U.S. money supply (M3) will be reported. The higher is the reported M3 number, the greater will be the need for protection, which means the higher will be the price of gold.

This isn't rocket science " even if a whole lot of friends of the spenders and printers would have you believe otherwise.

p.s., for those who missed my point a week or two ago that the Fed under Bernanke intends to drop the reporting of M3, here is the link: http://www.federalreserve.gov/releases/H6/.

Congress should not permit the dropping of one of the Administration's key economic reports.

You need to make your voice heard to convince your representatives to take a stand.