[Joe Wicked]

A hot wire has too much current going through it for it's size. This can be caused by having too much powered by the system (overloading), or by a bad component loading to ground. Bypassing the Amp gauge will tell you if it is the gauge, but I would think that it would be something else down the line. I had a similar problem on a 460. Turned out the Starter Solenoid was getting stuck. This created a huge load on the system and was burning up the wire. I shut off the truck and smelled something burning opened the hood and found the same wire you have getting hot on fire.

If you have a good multimeter, you can disconnect the Ammeter and use the Ammeter function of the multimeter to see if it is reading correctly. Be careful though as if it is from overloading you can damage the meter if you don't have the settings right.