“First Strikes”: A Marketing Gold Mine

[AC-migration]

What exactly is a “First Strike”? I’m sure this question has been discussed many times before on these boards, but I feel it is worth bringing up again, especially since it has now spawned an offspring in the form of the “First Day of Release” designation.

 

I never paid much attention when the “First Strike” designation started popping up on slabs. But recently, I 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 ( The Arlington Collection of Type 1 Double Eagles) obviously 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? Boy was I surprised when I found out just what kind of marketing program the “First Strike” designation was.

 

I don’t know who first thought of the “First Strike” marketing concept, but I’d like to congratulate the individual who did. Good job! I wish I had thought of it first!

 

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.

 

So 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 manufacture other than they obviously were manufactured before they were packaged and shipped.

 

So, the “First Strike” designation is 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. In general, I would agree with this statement. 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 begins production several weeks 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 that those struck later. This might be true if the Mint only used one set of dies during production. Since dies wear out and are replaced, this argument goes out the window. Also, a coin graded First Strike MS69 is no better than a non-First Strike coin graded MS69, regardless of what day it was minted.

 

But 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 carries on into the future 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 a another designation, “First Day of Release”. Apparently if the coins were packaged and the shipping documents created on the first day of release, they will give it this designation on the holder. It doesn’t matter what day the coins were actually minted, only when they were packaged for shipment. One can only imaging what they may think of next.

 

So, if you get a call from a dealer offering you a “First Strike” 2006 24k Gold Buffalo graded MS70, you now know that that coin may be any one of the coins minted before the official release date that possibly represent 50% of the total mintage based upon the U.S. Mint’s projected sales numbers, plus any others minted and shipped within the first month after the release date. Do you know how many 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.

 

 

Are any of you stamp collectors that collect First Day Covers? . . . Then you might be interested in this story.

 

When I was a kid, I loved collecting First Day Covers. I would always read the stamp column in my local newspaper watching for the next stamp to come out. I would go to my local stamp dealer to buy an Artcraft envelope for the new stamp, send it to the Postmaster of the city where the stamp was being issued along with coins, to cover the postage, taped to a piece of paper. I then waited for my First Day Cover to arrive. All this had to be done prior to the first day of issue so that your cover would be there on the first day to be cancelled.

 

Then the rules changed. Apparently, the Post Office no longer wanted to affix the stamps and cancel them all on that one day. So they changed the rules so that you had to wait until after the first day of issue, go buy the stamp yourself, affix it to the envelope, then mail it to the Postmaster in the city where the stamp had already been issued! Basically the covers were being backdated as First Day of Issue! What’s the point of having a First Day Cover if it was not really cancelled on the first day of issue?

 

So I quit collecting stamps and switched over to coins where things like this could never happen, or so I thought. . . . First Strike! First Day of Release! . . . Hmm! . . . I hear the third most collected item after coins and stamps is postcards. . . . Postcards could be cool! They don’t have any third party grading services for postcards do they?

[ChrisAZ1-migration]

I think you just answered my question in Numismatic Tangents. It seems it's all about marketing. If the dies change at 12,456 - I think there should be a lable that says "12,457 Struck" or maybe "new die struck" OMG what will be next. Back to my original point..... a PF70 is a PF70 is a PF70 .... end of story.

 

Thanks for all the good information.

Chris

[EZ_E]

AC, you're batting a thousand on great posts!

[HaydenTubbs]

AC, you're batting a thousand on great posts!

 

I know,he sure puts my nearly 4,000 to shame

 

 

 

 

[AC-migration]

Thanks guys. My wife saw my posts and jokingly said I am turning into the Ralph Nader of numismatics.

 

By the way, Hayden and Victor, have you guys noticed just how close you are to each other in total number of posts? Out of 4000 posts, your only about 20 apart.

 

Pretty spooky!

 

But seriously, I've learned a lot from reading other peoples' posts including many of yours, so I feel it's only fair that I share stuff in return. And I hope one day I'll see you both hit 5000 posts!

[EZ_E]

By the way, Hayden and Victor, have you guys noticed just how close you are to each other in total number of posts? Out of 4000 posts, your only about 20 apart.

 

I hadn't noticed that but Hayden joined two years after I did which means that he's been typing his wee-little fingers to the bone.

 

Hayden, can you type by the touch system or do you do the hen-peck method?

[TomB]

AC, I am very happy you joined the boards and look forward to your continuing contributions.

[TomB]

I know,he sure puts my nearly 4,000 to shame

 

Don't worry, Hayden, most posters put your nearly 4,000 posts to shame.

[MikeKing]

Great post, thank you, and welcome to the board.

[Stanley]

By the way, Hayden and Victor, have you guys noticed just how close you are to each other in total number of posts? Out of 4000 posts, your only about 20 apart.

 

I hadn't noticed that but Hayden joined two years after I did which means that he's been typing his wee-little fingers to the bone.

 

Hayden, can you type by the touch system or do you do the hen-peck method?

 

Hayden is to young to know about Hen Pecking.

[IGWT]

Hi & welcome, AC.

[jgrinz]

Has anyone inroduced AC to the Journals - We could use some goodies there

[MorganMan]

Two things I would like comments on, and also will give my opinion.

 

1

I would have much rather seen the grading companies have used the "first strike" for coins like the official first day of issue coins that are in the covers and issued by the US Mint. It would at least have had some honesty in it.

 

 

2.

 

I think what the grading companies have done with "first strike" has not only taken away years of the integrety thay had (the top tier TPG's), but I myself now do not value a graded coin nearly as much as I used to, because I see that even the top TPG's will grade anything to make a buck. The great irony to this is that they still refuse to grade a "Real" historical coin that was cleaned maybe 100 years ago, but has much more numismatic value than a "First strike Buffalo".

 

 

JMHO

 

MM

[Narmuriel]

Post deleted by Narmuriel

[Narmuriel]

Two things I would like comments on, and also will give my opinion.

 

1

I would have much rather seen the grading companies have used the "first strike" for coins like the official first day of issue coins that are in the covers and issued by the US Mint. It would at least have had some honesty in it.

 

 

2.

 

I think what the grading companies have done with "first strike" has not only taken away years of the integrety thay had (the top tier TPG's), but I myself now do not value a graded coin nearly as much as I used to, because I see that even the top TPG's will grade anything to make a buck. The great irony to this is that they still refuse to grade a "Real" historical coin that was cleaned maybe 100 years ago, but has much more numismatic value than a "First strike Buffalo".

 

 

JMHO

 

MM

 

[zrlevin]

Great post, MorganMan!

[Narmuriel]

Awesome post AC!

[AC-migration]

Thanks for all the replies everyone. Its good to get the opinions flowing on this topic. But, I just want to make sure that after reading this post, and possibly my first post about the mislabeled holder ( Link to Post), you don't mistake my posts as an indication that I might have a negative opinion of NGC (or even PCGS). While I may not agree with everything they do, such as the "First Strike" issue, I do believe that they perform a valuable service to the hobby and are a positive force overall.

 

If you take a look at my collection ( The Arlington Collection), you will see that I mainly collect gold double eagles. If it weren't for the overall acceptance in the hobby for the grading done by NGC and PCGS, I wouldn't have the collection that I do. I do not trust my skills at accurately grading these coins myself, and even if I did, I could not rely on a future buyer agreeing with my grading. NGC and PCGS help to remove some of that uncertainty (although not all of it).

 

Also, gold coins are counterfeited more than any other type of coin. So having that authentication by NGC and PCGS is very valuable to me. I have heard some horrible stories of knowledgable people purchasing what turned out to be fakes. And let's face it, when was the last time you saw a million dollar rarity being auctioned that was not in a NGC or PCGS holder? I can't recall any.

 

So if you don't like the "First Strike" designation, make sure that in addition to blaming the TPG's, give equal blame to the dealers who request the "First Strike" designation in order to sell them at a premium to uninformed collectors (such as the dealer who called me about the gold Buffalo). That's why I posted this, to help inform other collectors. If they agree, they will stop paying premiums for these coins. Remove the demand, and the supply will go away.

[SPD-migration]

I agree totally. I've thought the same thing from the beginning of this ridiculous marketing campaign. I feel the same way about the "20th Anniversary" moniker on the slabs of any year of the SAEs. It's all a ploy. Don't get me wrong, I will get the designation on coins I submit because it's here to stay unfortunately. But, if in the future, some poor schmuck wants to pay me a premium for a "First Strike" coin, who am I to argue. I, however, would never pay a premium for a "First Strike".

[EZ_E]

 

By the way, Hayden and Victor, have you guys noticed just how close you are to each other in total number of posts? Out of 4000 posts, your only about 20 apart.

 

Pretty spooky!

 

 

 

 

Uh-oh! Looks like we've been cloned.

 

 

 

 

Reged: Oct 15 2002

Posts: 3965

Loc: Winnemucca, NV

 

Reged: Jun 30 2004

Posts: 3965

Loc: Florida

[AC-migration]

It appears my blog on 9/8 and message board post on 9/9 about "First Strikes" has triggered some action on the part of others who seem to agree. Apparently I hit a nerve. The "First Strike" premium may eventually wind up on the endangered species list as more people get educated as to what the designation really means.

 

Here's my blog from Friday 9/8 (basically the same as the original post for this thread): First Strikes: A Marketing Gold Mine

 

The next day on Saturday 9/9, another blogger, whose blog is much more read than mine, sees my story and puts his own out there along the same lines (you have to browse down to 9/9 to see his article which does acknowledge mine): Other blogger's article

 

Yesterday, Friday 9/15, a precious metals news site issued an article that basically repeats the same train of thought of my original post. The author of this article is the head of a large precious metals dealer. When I did a quick look at their website, I saw plenty of gold bullion coins, but I did not see any First Strike coins being offered. (a definite plus in my book): News Article

 

What's different this time from much earlier First Strike posts? Instead of just calling the First Strikes a marketing ploy or a scam, these articles are taking the time to explain what a First Strike is. I believe the more educated people are about First Strikes, the less of a premium they are going to be willing to pay. (but I could be wrong)

 

So continue to spread the truth. Don't give your opinion, just give the facts and let others decide for themselves. Or better yet, just direct them to the US MInt's Consumer Awareness Hot Items WebPage. Afterall, its up to collectors to decide what really deserves a premium. Those who don't believe a premium is warranted can simply choose not to pay it. If enough people choose not to pay it, demand dries up and the premium simply fades away.