For the quarter ending Jan-10-06, the growth of M3 was +7.6 pct, which is a gain for the corresponding week earlier figures of +7.5 pct. And compared to the quarter ending Jul-11-05 money supply growth was +9.1 pct, which is a gain for the corresponding week earlier figures of +9.0 pct.

So with money supply growing at about three times GDP growth, month after month, it is quite apparent that the U.S. Administration is trying to boost (reflate) the economy at the same time that the Fed is tightening credit by continuing to raise short-term interest rates.

In my view, this is the reason that traders have their pedal to the metal, and except for a few pull-backs on technical over-bought conditions or possibly gold-selling by the Fed to try to stabilize USD prices, they are not letting up.

Gold today (Feb-06 contracts) is up +$4.50 to $563.50.

If you notice the RSI for GLD or the major gold stocks, any pull-back is stopped well before the indicator level drops to the usual (during non-trending) level of about 30. In a strong trending market, boosted by a bullish cyclic phase, traders show their appetite for "high-risk" buying.

This is, as I said a couple days ago, no time to short any pull-back. Those who do, stand a good chance of being squeezed.

In fact, I do not think it appropriate to actually short-sell a rising trend at any time, and my short on the XLF is a good example of working against proven strategies and ending up with a bad trade.

So, with gold rallying just prior to and after the money supply numbers came out, the trader's universe is unfolding as it should. The stories of "Iran nukes" and "Osama threats" are interesting stories, but just stories.

You have to keep your eye on the technical indicators of actual prices at times like this.

10:00am ET update:

Gold (Feb-06 contracts) is up +8.40 to $567.40