It is a move I am very excited about as it gives the Mint direct control over the refinery’s output, which is typically between 300 to 400 tonnes of gold a year. I’m reminded of the old adage, “He who owns the gold, makes the rules”, but of course the Mint doesn’t own the gold, its clients do.

The substantial physical inventories needed to support this throughput, and the Mint’s own stock, have been backing Depository client metal for many years. All this acquisition will do is change the refinery’s inventory from being listed as a metal receivable in the Mint’s financials to being a directly owned asset. This should increase the comfort factor for many Depository clients even though it doesn’t really change the fact that their holdings have been, and always will be, backed by physical.

I will be interested to see how the Mint’s critics and competitors try to spin this news against us. It does make it hard to argue that a business that refines 300 tonnes of gold a year “doesn’t have any gold”.

Maybe they’ll argue that we had to get the refinery to plug the imagined short position that they think we have. Apart from exposing their woeful ignorance of how our operations and a refinery’s work, the logical conclusion of such a position would be that the supposed short position is now plugged, making the Depository a totally safe facility!

For those not aware, the AGR refinery operations were originally established by the Perth Mint in 1899 when it was founded as the Perth branch of the British Royal Mint. In 1998 the refinery was combined with the refinery operations of Golden West to form the AGR Joint Venture and then subsequently merged with Johnson Matthey’s Melbourne refinery in 2002. So in a way the refinery business is just coming back to its home.

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Their latest earning release also highlighted a 17% year on year growth in revenues — now up to $6.67B per quarter — from $5.7B per quarter during the same period in 2008. Chief executive Eric Schmidt continues to make optimistic assessments of the current state of affairs.

“Given that the global economy is still in the early days of recovery, this was an extraordinary end to the year,” he said. “Our performance in 2009 underscored the strength of our management team, the resilience of our business model and the pace of innovation within our product and engineering teams, which continued unabated throughout the downturn.”

In a sign that consumers are increasingly willing to spend, more Internet users clicked on ads. The number of paid clicks on ads served on Google’s Web sites rose 13% from last year and 9% from the third quarter of 2009.

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The impressive swing in net income was about 10 times greater than the $234 million (4 cents per share) that the firm reported last year on January 15.

We’ve continued to watch in amazement as Intel seemed completely unphased by the economic downturn of 2008 and 2009:

1. January 2009: Intel beats its Q4 2008 estimates amidst negative headlines everywhere else.

2. April 2009: Intel declares, “We believe PC sales bottomed out during the first quarter and that the industry is returning to normal seasonal patterns.” In the first-quarter, the firm’s profit far exceeded analyst views.

3. July 2009: Still swimming upstream, Intel posts its largest quarterly sequential increase in sales since 1988, further boosts its guidance for Q3 in the face of naysayers calling for lackluster Q3 growth.

4. Oct 2009: Cisco joins Intel in declaring that “Recovery Is Gaining Momentum.”

And just prior to yesterday’s Intel announcement you’ll remember that analyst firm IDC declared that in Q4 2009, the U.S. PC “market exploded higher.“

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IDC saw pent-up demand for new computers in a reviving U.S. economy along with year over year comparisons with a much weaker quarter as the recession deepened in late 2008.

“The U.S. market exploded,” said IDC analyst David Daoud

You’ll remember it was Intel that predicted in June last year that 2009 Q4 growth would be anything but lackluster.

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In a research report released last week the firm estimates that telecom service providers will increase their spending by 1.5% to $57.7 billion.

Avian estimates that the largest spenders will be AT&T Inc. (NYSE: T) ($17.5 billion), Verizon Communications Inc. (NYSE: VZ) ($16.6 billion), Comcast Corp. (Nasdaq: CMCSA, CMCSK) ($5 billion), and T-Mobile USA ($3.5 billion).

Avian’s estimates may be conservative. Several weeks ago Dick Lynch, chief technology officer for Verizon said, “It’s no accident that again [in 2009], Verizon’s consumer and business services won major industry awards.” Lynch asserted that those awards were the direct result of network spending in 2009. “The better the network, the better the performance of the applications that ride on them. It’s as simple as that,” he said.

Accordingly, it is likely that communications providers will spend much of their 2010 capital budgets on technologies that increase the efficiency of their high speed wireless networks. In 2010, CTO’s are focused on core fiber capacity and grooming technologies. AT&T’s CTO John Donovan said last week that his firm completed 7.2-Mbit/s wireless upgrades throughout its whole network including doubling the number of cell sites with fiber-optic capacities.

“We expect that the majority of our mobile data traffic will be carried on fiber-based backhaul by the end of 2010,” Donovan said. AT&T will continue to enhance the “world’s largest deployment of 40-Gig backbone technology,” boasted Donovan.

Last week T-mobile had good news boasts of it own. The firm announced the completion of a scheduled upgrade to its entire network — an upgrade which boosts wireless air speeds from 3.6 Mbps to 7.2 Mbps. Additionally the company promises that speeds in 2010 will peak at blazing wireless rates of 21 Mbps and that spending on a trial in Philadelphia is already underway.

The spending news came just prior to T-Mobile’s announcement introducing the “Nexus One”, a smartphone that will run on T-Mobile’s network. The Nexus One supports these high speed wireless technologies and analysts see its pairing with T-mobile’s high-speed network upgrades as a significant enabler for economic and technological innovation.

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Same-store-sales declines for Lowe’s progressively moderated as Q3 advanced, with October same-store sales only dropping 5.6%, following a 7.9% decline in September and an 8.7% drop in August. For the full quarter, same-store sales fell 7.5%, an improvement over the second-quarter’s 9.5% decline.

The firm sees inventory in better shape than a year ago and also sees signs that consumers are responding to good deals and promotions — underscoring the firm’s optimism.

“We certainly do feel better about how things are trending,” CFO Robert Hull said.

Lowe’s Chairman and Chief Executive Robert Niblock said appliances, flooring and interior paint posted same-store sales increases. A recent consumer survey found that flooring projects as well as kitchen and bath face-lifts are at the top of consumers’ lists of planned home improvement projects.

“The fact that these types of projects are at the top of homeowners’ to-do lists is encouraging,” Niblock said.

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1. In the world of banks, bigger can be better, Charles Calomiris in the Wall Street Journal.
2. A three-way split is the most logical, by John Gapper in the Financial Times.
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4. See the section titled Regulatory and legislative reaction and the foreign exchange market in Lessons for the foreign exchange market from the global financial crisis by Michael Melvin and Mark P. Taylor on voxEU.

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Financial business being run down rapidly, industrial business, a basic GDP play, seeing 8% lower revenues from the year ago period.

The pre-eminent American industrial company manages decline.

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While skeptics remain, Q3 earnings season kicked off on Wednesday with almost all those announcing earnings surprising to the upside.

Alcoa, the firm which much earlier in the year pegged the global turnaround, swung to a profit in Q3. “We do clearly see growth, substantial growth … in China,” Alcoa CEO Klaus Kleinfeld told reporters. “The second half of the year is clearly better than the first half in many industries and many regions.” You may remember Kleinfeld’s “giant sucking sound” of demand predictions.

Google also reasserted our sentiment of several months now, “We are clearly seeing aspects of recovery, and what is notable is that we’re seeing aspects of recovery not just in the United States but in Europe… We never stopped hiring, but we told our team internally and we’ve said to many other people that we are increase our hiring rate and our investment rate in anticipation of a recovery.”

Our favorite perma-doomsters like Nouriel Roubini continue to beat the drum of “double dip recession”, but the Q3 earnings results will paint a much different picture.

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Last week General Motors (GM) announced their new program that further attempts to boost consumer confidence in their vehicles. The money-back guarantee states that you can return the vehicle for any reason, no questions asked, up to 60 days after purchase.

A quote from GM’s press release reads like this:

General Motors announced today that it will offer a Satisfaction Guarantee to eligible buyers of new Chevrolet, Buick, GMC and Cadillac vehicles. The guarantee allows customers to return their vehicle to their dealer between 31 and 60 days of purchase and receive a refund of the purchase price for the vehicle.

GM’s idea is that the program will prove that their vehicles are just as good as their competition. That might be, but there is likely even better consumer news just around the corner and that just might translated to further good news for the auto industry.

As most entrepreneurs will attest it is almost always a good idea to offer a money back guarantee. And so it is extremely likely that several other major car makers will follow suit quickly offering very similar programs for their 2009 and 2010 models. The result? More hesitant consumers will see this as just one more reason to move from a very conservative fiscal stance to one that takes a bit more risk on a big ticket purchase. Why not? There will be nothing financially to lose for up to 60 days.

For GM, there is no guarantee that the program will only boost interest in their vehicles, but it does seem clear that if other automakers follow suit, the auto industry (and the economy as a whole), will likely benefit by this increased second half activity.

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