First Strike Coins Buyers Beware

With the release of the U.S. Mint's new pure gold American Buffalo gold coin, First Strike coins have again become telemarketers' favorites. Despite the U.S. Mint maintaining that there is no widely-accepted and standardized numismatic industry definition of "first strike" coins, they definitely exist in the coin industry, and potential buyers need to be aware just what First Strike coins are and why they are promoters' favorites.

First Strike coins are recent developments, having been first promoted in 2005. The most frequently promoted First Strike coins are American Gold Eagle coins, American Silver Eagle coins, American Platinum Eagle coins, and now the new American Gold Buffalo coins.

One often seen definition of First Strike coins calls them "the first coins struck from a new set of dies." Another calls them, "near-perfect specimens produced within the first few hundred strikings in an edition." The U.S. Mint's production and distribution of coins challenge both definitions.

The U.S. Mint does not track the order in which it mints coins during their production and does not segregate or specifically identify the first coins minted from a set of dies. And, the Mint produces up to fifty percent of the projected sales of new coins weeks prior to their release.

Further, the Mint does not necessarily ship coins in the order in which they were minted, thereby making it impossible for promoters of First Strike coins to know that the coins being promoted as First Strike are actually the "first coins struck from a new set of dies." The numbering on the boxes of coins shipped from the Mint are for accounting and inventory purposes only and do reflect the order in which the coins were minted.

Finally, the U.S. Mint has no First Strike program for the minting and distribution of its coins. However, the Mint sometimes does "first strikings" of new coins, but the "first strikings" are ceremonial and usually are for only two coins, which are not set aside but are put into the regular inventory of the new coins. It is probably from these ceremonial strikings that promoters came up the idea of First Strike coins.

This fairly much lays to rest the notion that First Strike coins are somehow special and that buyers should pay the high premiums that promoters ask. Further, it should be noted that First Strike coins were first promoted with the release of 2005-dated Gold Eagles and Silver Eagles. With the concept being so new, there is no way of knowing if First Strike coins will retain the high premiums for which they are being sold. Buyers beware.

September 15, 2006

Bill Haynes heads CMI Gold & Silver Inc, one of America's oldest precious metals dealers. See CMIGS' website at www.cmi-gold-silver.com