It is common for dealers to offer certified coins such as the 24k United States Gold Buffalo in a “First Strike” holder with a grade of MS-70. Although some coin collectors actively look for “First Strike” coins, many are not exactly sure what “First Strike” really means. Were these coins really one of the first coins struck at the United States Mint? You will be quite surprised when you find out what kind of misleading designation “First Strike” really is.
”First Strike” Marketing Genius
It is not certain who first thought of the “First Strike” concept, but they were a marketing genius. He or she managed to create a perception of value, for an otherwise ordinary coin, based on nothing more than when the U.S. Mint shipped it to the customer and when it was submitted to the third-party grading service!
Do you remember when all shampoo bottles had the directions “lather, rinse, then repeat?” Do you think some doctors 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.
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. The grading companies base the cutoff date for coins based upon the announced release date. Collectors must submit all coins with their original U.S. Mint packaging, and accompanying documents. The documents must indicate where and when the coins were packaged for shipment. Additionally, it must be within thirty days of submission to the third-party grading service.
The keywords 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. Coin collectors can distinguish one coin from another by the date on the coin. The perception of 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 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 manufacturing practice is all 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 assumption 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.” To receive this designation, the United States Mint must have packaged the coins and ship them on the first day of release. It doesn’t matter what day the mint manufactured the coins, only when they were packaged for shipment on the first day of release. 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” 24k United States Gold Buffalo bullion coin graded MS-70, 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 represent anywhere from 30% to 80% of the total mintage for that issue.
The Bottom Line
The bottom line is that it is impossible to tell if "First Strike" coins were really struck first. The production process is complex and there is no guarantee that the first coins shipped were the first coins struck. Therefore, the value is created by a tiny piece of paper that is encapsulated with the coin and labeled as "First Strike."
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."
Edited by: James Bucki