(Special note from your Guide: This is the first in a series of guest articles by A.C. Dwyer, owner of the Arlington Collection.)
UPDATE: Since this article was written, NGC has had the integrity and courage to step up to the plate and eliminate the "First Strikes" designation from their labels, replacing it with "Early Releases." PCGS, unfortunately, has no plans to stop this deceptive practice.
UPDATE #2: NGC has agreed to settle a class-action lawsuit regarding its use of "First Strikes."
I recently received a call from a dealer who offered me a chance to buy the new 24k Gold Buffalo in a “First Strike” holder with a grade of MS70. Although my collection does not include “First Strike” coins, this made me curious to learn more about what “First Strike” really means. Was this some U.S. Mint designation? I was quite surprised when I found out just what kind of misleading designation “First Strike” was.
”First Strike” Marketing Genius
I don’t know who first thought of the “First Strike” concept, but I’d like to congratulate the marketing genius who did. He or she managed to create a perception of value, for an otherwise ordinary coin, based on nothing more than when it was shipped from the U.S. Mint!
Do you remember when all shampoo bottles had the directions “lather, rinse, then repeat”? Do you think some doctor discovered our hair or scalp was better off if we washed it twice?
No, some marketer figured out that if you changed the directions to add “then repeat”, people would do it and you would sell twice as much shampoo to those people. Maybe this marketer moved on to one of the third party grading services.
What exactly is a “First Strike?”
In general, a third party grading service gives a “First Strike” designation to those coins packaged for shipment from the U.S. Mint within a month of their official release date.
For Mint State coins, the cutoff is basically January 31 of each year. Proof coins are based on the announced release date. All coins must be submitted with their original Mint shipment packaging with accompanying documents indicating they were packaged for shipment from the U.S. Mint within the first month of their official release.
The key words here are that the coins must have been packaged for shipment from the U.S. Mint within the first month of their official release. It has nothing to do with the date of striking other than they obviously were struck before they were packaged and shipped, which is, of course, true of all coins!
So, the “First Strike” designation is nothing more than a marketing program based on the principle that collectors have always sought out coins of special significance, and one way that a coin can be distinguished from another is by the date that it was struck. The perception being given by the “First Strike” designation is that somehow these coins were struck first, or at least early, in production.
Some “First Strike” Problems
The problem is that, during production, the U.S. Mint does not keep track of the order in which they mint coins. Also, the U.S. Mint usually begins production several weeks to several months before the coins are officially released.
By the release dates for the 2005 and 2006 bullion coins, the U.S. Mint had already minted approximately 50% of the total projected mintage for these coins. The dates on shipping labels and packing slips do not necessarily correlate to the date of manufacture. This is all clearly stated on the U.S. Mint’s website under Consumer Awareness.
I have also heard the argument that the “First Strike” designation somehow implies that the strike of the earlier coins is somehow better than those struck later. This might be true if the Mint only used one set of dies during production. Since dies constantly wear out and are being replaced in an ongoing cycle, this argument goes out the window. Also, from a purely objective standpoint, a coin graded First Strike MS69 is no better than a non-First Strike coin graded MS69, regardless of what day it was minted.
The Value of the “First Strike” Designation
There is no arguing the fact that coins with the “First Strike” designation are commanding a premium over their non-designated counterparts, so there is demand for this designation whether you think it makes sense or not. Third party grading services are profit oriented businesses and not charities set up to benefit the hobby. If there is a demand for this designation from collectors, then it is in their interest to supply that demand. Whether or not this demand stands the test of time is something that we will have to wait and see.
For now, the “First Strike” designation has been a successful marketing campaign. So successful, in fact, that one third party grading service has come up with another designation, “First Day of Release.” Apparently, the coins must be packaged and the shipping documents created on the first day of release. It doesn’t matter what day the coins were actually minted, only when they were packaged for shipment. One can only imagine what they may think of next, but at least this designation is an honest one.
Are “First Strike” Coins a Good Investment?
If you get a call from a coin dealer offering you a “First Strike” 2006 24k Gold Buffalo graded MS70, you now know that the coin could be any one of those which were minted before or during the first month of the official release date. This could possibly represent anywhere from 30% to 80% of the total mintage for that issue. Do you know how many coins that is? . . . Neither do I. . . But I do have to fess up, I may not have bought a “First Strike” coin, but I do still rinse and repeat.