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December 2006

COLLECTOR SUES OVER "FIRST STRIKE" DESIGNATIONS

Separate class-action lawsuits have been filed in Florida against two of the leading third party coin grading and authentication companies concerning their designations of certain coins as "First Strikes." Charles Lipcon of Lipcon, Marqulies and Alsina, representing plaintiff Thomas Francisco, has filed suits against Numismatic Guaranty Corporation (NGC) and Collector's Universe Inc. which owns Professional Coin Grading Service (PCGS).  The suits allege the companies are violating unfair trade practices laws of their home states.

The suits state that "In the world of coins, the designation 'first strike' has a meaning that a particular coin is one of the first coins struck from a certain die set" but that the companies issue it "not for the first coins struck by the U.S. Mint, but rather for coins that are shipped by the Mint during the first month after the coin is issued."

The suits cite a U.S. Mint advisory concerning 2005 and 2006 American eagles and 2006 American buffaloes which notes that the United States Mint does not "track the order in which we mint such coins during their production" and that it "begins production several weeks before these coins are scheduled to be released. By the release date for the 2005 and 2006 bullion coins, the United States mint has already minted approximately 50% of the projected sales numbers for these coins."  The advisory goes on to state that the date on each shipping box signifies the date on which the box was packed and "does not necessarily correlate with the date of manufacture."

Without commenting on the merits of these lawsuits, we think it's a good opportunity to remind collectors to consider carefully the value, if any, of designations like "First Strike" when making purchase decisions.  Currently, a slabbed coin labeled as First Strike is often priced by some dealers and in online auctions at a hefty premium to a comparable coin without the designation, particularly if graded MS70 or PF70.  Experience suggests that the collector may find it difficult to secure a comparable premium when re-selling the coin.  Should either lawsuit be successful or grading services revise their policies on which coins are eligible for the designation, we anticipate pricing differences would shrink dramatically or disappear altogether.

CURRENT SPECIAL

Through December 19, Telesphere Numismatics offers free priority mail shipping on most orders of $90 or more.  Choose from our extensive selection of great collector coins, paper money, books and supplies and save $6.95 or more on shipping.  Full details are posted on our Current Special page.

MORE ON 2007 AMERICAN BUFFALOES

In last month's issue of our newsletter, we discussed the upcoming availability of 2007 gold and silver American eagles and 24 karat gold American buffaloes.  Introduced in June 2006, the American buffalo is based on the classic Buffalo nickel design of 1913 and contains one troy ounce of 0.9999 fine gold.  The authorizing legislation requires the Mint to sell these coins for at least 12 months, in effect ensuring that 2007 dated coins would be struck.

The Mint has recently announced that it will also strike buffaloes containing 1/10, 1/4 and 1/2 ounce of gold during 2007.  However, the fractional sizes will only be available as collector offerings similar to uncirculated American eagles introduced during 2006.  Each coin will be struck on a specially burnished planchet and will have a 'W' mintmark.  These collector coins are priced at higher premiums above the value of the precious metal they contain than bullion coins that will continue to be sold only through the Mint's authorized purchaser network.  Although they're also struck at the Mint's West Point facility, American eagles and buffaloes sold as bullion coins do not have a mintmark.

Release dates for 2007-W American eagles and buffaloes have not yet been announced.  The Mint typically releases bullion coins on the first business day of the new year.  We will begin accepting orders for 2007 silver eagles later this month and for 2007 gold eagles and buffaloes by early January.

HAPPY HOLIDAYS TO ALL!

We wish you a joyous, safe and peaceful holiday season.  Merry Christmas and Happy New Year!

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