T.A.W. BLOG

CU forum member DHeath started this thread in the PCGS coin forum:

http://forums.collectors.com/messageview.cfm?catid=26&threadid=596698

Thread title: “Having given it further thought, I think Mark Feld’s principled approach is correct.”

DHeath states that first strike labels are “confusing at best” and elaborates in a further post: “Mark spoke his mind, moved on to contribute on another board, and didn’t spend much time whining about PCGS. Generally good form. The first strike designation IS confusing, since it has specific numismatic meaning. I agree with his sentiment regarding its use. JMO I like the PCGS board, and their product, but I disagree with that term, and the decision to ban Mr.Feld.”

PerryHall perhaps appropriately says goodbye (as PCGS bans anyone that questions first strike labeling practices): “It was good knowing you guys”  

jmski52 stated truth about PCGS first strikes: “Unless PCGS (who happens to be the only TPG I happen to respect -  ) has a trained Q.C. Man standing by on each Production Line and can document the striking sequence of each and every coin manufactured, I really don’t see it. Besides that, wouldn’t each alloy and die combination have different length die lives? Wouldn’t a designation like this require an assessment of die deterioration in each and every case? For all practical purposes, why wouldn’t a grading company just evaluate the strike like they evaluate hits? Or is that too nebulous? Just my unprofessional, but somewhat educated opinion, and I have been wrong before.”

FatMan tells it like it is: “Mark Feld’s actions speak for themselves. He is a class guy all the way. And, to say the designation is confusing at best is simply an understatement. It is much, much worse.”

Realone calls for PCGS to do the right thing: “Wouldn’t it be nice if PCGS asked Mark to return, it would go along way in showing that they are not the big pompass organization that some say they are. I personally respect PCGS in some ways, I usually only by PCGS albeit some exceptions and when there is a rae exception I will try to cross it over to them. But they need to listen to us sheeple and respect our minds and our purses make that wallets.”

RYK takes a stand: “Geez, a half a dozen regular posters are trying to end their forum lives in this thread.
I agree completely with FatMan. Make it lucky seven. “

When one man speaks up, it’s a blip on the radar.  When PCGS takes out a single poster, it is hardly noticed.  But as a group, the CU forum members can collectively make a huge difference.  I’m thrilled to see that they are trying.

Details have not yet been published as to what the PCGS settlement was, but I predict they will cease using the term “first strikes” at some point in the near future.  There has been no immediate announcement likely because they know when this new is announced, it will make waves within the community, immediately devaluing countless collections and dealer inventory alike (as well as a lucrative $$$ dealer pipeline).  NGC hasn’t settled yet, perhaps because PCGS was also forced to pay restitution (just a guess) and NGC isn’t willing to.  Afterall, NGC stopped using the term “first strike” of their own free will back in 2005 (replaced with the term “early releases”).

Here’s the full article from Coin World, by Jeff Starck:

http://www.theauctionwatch.com/AR-M350_20070517_161155.pdf

Here’s what PCGS considers a “first strike” (and what you will get if you purchase a PCGS slabbed first strike coin):

http://www.pcgs.com/firststrike/

Beginning in 2005, PCGS began designating coins packaged and delivered by the U.S. Mint in the 30 day period following the initial sales date of a new product as First Strike®. For instance, new American Silver Eagles typically go on sale each January 1st, thus any coin packaged or delivered and submitted to PCGS for certification between January 1 and January 31 qualifies for the First Strike® designation.  According to the United States Mint, the Mint has not designated any coins as “first strike,” nor does the Mint track the order in which coins are manufactured during their production. The United States Mint states that they exercise strict quality controls to assure that coins of high caliber are produced from each die set throughout its useful life. The Mint states that their manufacturing facilities use a die set as long as the quality of resulting coins meets United States Mint standards, and then replace the dies, continually changing sets throughout the production process. Coins which meet the criteria of PCGS First Strike® will be designated as a First Strike® regardless of when those coins were minted.

Excuse me while I shake my head.  PCGS will designate coins as first strikes regardless of when those coins were minted?  And why the silly proprietary trademark of the term “first strike” can be answered by explaining what a true first strike really is.  The term first strike is accepted within the numismatic community (and has been for over 100 years) as the following:

From NumisMedia:

http://www.numismedia.com/glossary.htm

A coin struck early in the life of a die. First strikes can be characterized by striated or mirror-like fields if the die was polished. First strikes are almost always fully or well struck, with crisp detail.

Goodness!  A real first strike is a coin struck early in the life of the die!  I guess it does matter when a coin was minted, doesn’t it?  Not if PCGS gets their way.  Let me explain how utterly absurd this is.

Let’s take the term “brand new” for instance.  We don’t really need a dictionary to figure out what “brand new” means, do we?  It means a product is brand new, that is to say, the definition of the word is self-evident.  The word literally means what it says, just like “first strike” does.  But let’s suppose I decide to sell 30 year old garage sale junk as “brand new”, and I certify it as such.  When my dubious practices are called into question, I decide to apply for a trademark of the term “brand new”, and I will explain on an obscure webpage how I’ve decided that “brand new” means “anything I purchase at a garage sale, regardless when it was made”.  Everything will be on the up and up then, right?  I’m sure customers will flock to my product!

Here’s PCGS’ official statement and definition of “first strikes”, as they slab them:

http://www.pcgs.com/firststrike/

 PCGS FIRST STRIKE^®
 

A New Way to Collect U.S. Coins

With PCGS First Strike® designation you can now expand your collection in these exciting areas:
U.S. Silver Eagles • U.S. Gold Eagles • U.S. Platinum Eagles • U.S. Buffalo Gold

Here’s how PCGS identifies the coins submitted for First Strike® designation.
Beginning in 2005, PCGS began designating coins packaged and delivered by the U.S. Mint in the 30 day period following the initial sales date of a new product as First Strike®. For instance, new American Silver Eagles typically go on sale each January 1st, thus any coin packaged or delivered and submitted to PCGS for certification between January 1 and January 31 qualifies for the First Strike® designation.

The First Strike® designation is a proprietary trademark of PCGS.
According to the United States Mint, the Mint has not designated any coins as “first strike,” nor does the Mint track the order in which coins are manufactured during their production. The United States Mint states that they exercise strict quality controls to assure that coins of high caliber are produced from each die set throughout its useful life. The Mint states that their manufacturing facilities use a die set as long as the quality of resulting coins meets United States Mint standards, and then replace the dies, continually changing sets throughout the production process. Coins which meet the criteria of PCGS First Strike® will be designated as a First Strike® regardless of when those coins were minted.

PCGS offers the Set Registry for collecting, organizing and competing with your First Strike® designated coins.
Here are the sets you can build to enhance your enjoyment in collecting First Strike® designated coins:

• Silver Eagles Complete Set with First Strike® (1986-Present)
• Gold Eagles Complete Set with First Strike® (1986-present)
• Silver & Gold Eagles Complete Set with First Strike® (1986-present)

• Platinum Eagles Complete Set with First Strike® (1986-present)
• Gold & Platinum Eagles Complete Set with First Strike®(1986-present)

The population of PCGS First Strike® one ounce bullion coins is shown in the table below.
The number PCGS has certified in all grades is compared to the total sales of all one ounce bullion coins sold by the U.S. Mint:

	2005		2006
	U.S. Mint Sales	PCGS First Strike®	U.S. Mint Sales	PCGS First Strike®
One Ounce Gold American Eagle	351,500	16,752	201,500	23,323
One Ounce Silver American Eagle	8,405,000	40,720	9,981,000	151,785
One Ounce Platinum American Eagle	7,300	848	7,100	548

PCGS is one of the leading third party coin authentication and grading services, operating for over 20 years and certifying over 14 million coins. PCGS employs 15 experts with an average of 26 years of experience in the collectible coin market. In the year ended June 30, 2006, PCGS authenticated and graded 1.789 million coins with an aggregate declared value of $1.613 billion.

© 1999 - 2007 Collectors Universe, Inc. All Rights Reserved.

I’d like to cut and paste this article written by Todd Hafer from

http://www.lipcon.com/news_article84.shtml

 “I consider it outright fraud,” said the Miami, Fla., attorney who filed a class-action lawsuit against Numismatic Guaranty Corporation and Professional Coin Grading Service alleging that the third-party grading services are deceiving eventual buyers by labeling coins as first strikes.Attorney Charles Lipcon, of Lipcon, Marqulies and Alsina, representing plaintiff Thomas Francisco and “others similarly situated,” said the practice by NGC violates Florida’s Deceptive and Unfair Trade Practices law and PCGS is violating California’s Unfair Practices Act.

The suit, filed Nov. 7 in U.S. District Court, Southern District of Florida, Miami Division, states that NGC graded more than 100,000 gold and silver coins in 2005 and 2006 that were given the special designation of “first strikes.” PCGS gave the first-strike label to more than 50,000 gold and silver coins in the same time period.

“This designation has been and is currently being used by sellers of coins as a promotional tool in order to promote and sell these coins as being special or different, when in fact they are not special or different,” the civil complaint states.

It continues, “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. Normally, these coins are considered more valuable and more desirable because of being one of the first coins of that particular issue to be struck.”

The complaint states that the companies are using the first-strike designation “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.”

It says that NGC and PCGS are aware that promoters and sellers of first-strike coins “are incorrectly informing the coin-buying public that the designation on these coins means that these coins are among the first coins struck by the United States Mint and therefore are worth more money than other identical coins without the designation of “First Strikes.”

The lawsuit states that designating the coins as first strikes is unfair and deceptive because the term is being used not to show that the coins are 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 shipped.

The complaint said the companies profited “as that allows its customers to use the designation as a marketing tool and as a means to charge more money to the public and to the plaintiff.”

Lipcon said dealers are selling the coins for as much as four times what they are really worth based on the first strike label.

“The term is being b*stardized in order to create a product to sell,” he said.

The U.S. Mint issued an advisory earlier this year saying that it does not track the order or date of the coins it mints and that by the release dates, about 50 percent of the coins have already been minted. The advisory said that the date on the box they are shipped in represents the date that the box was packed, which does not correlate with the date of manufacture.

“If you look at the numbers, there can’t be tens of thousands of first-strike coins,” Lipcon said.

“It depends on your definition of first strike,” said PCGS CEO Michael Haynes. He said the PCGS definition is coins that are released in the first month of production.

Haynes said a value is always placed on coins that are struck earlier in the process. The less wear on the die, the sharper the strike usually is.

Haynes said the free market holds sway in the process.

“Buyers can buy or not buy and sellers can submit or not submit,” he said. “We are not in the business side of coins — we do not buy or sell them.”

NGC officials were not available for comment as of the Numismatic News deadline.

Lipcon said that PCGS filed to trademark the first-strike designation. He said earlier this year, NGC filed to have the trademark withdrawn.“What’s interesting is that both filings contained the correct description of “first strike” as the first official coin off the press,” Lipcon said.

The complaint also quotes John Albanese, the founder of NGC, but who is no longer associated with the company, “… coin dealers and grading services must stop calling the bullion coins first strikes or risk losing credibility with collectors … It’s flat-out wrong. It’s really just a marketing gimmick.”

The lawsuit asks for compensatory damages, including the difference between the cost of buying a coin labeled “first strike” and a similar coin without the label, ordering the companies to give up all funds it wrongfully collected for putting the labels on coins, attorney’s fees, costs and expenses of filing the civil action and the placement of an injunction against the companies to continue applying the first-strike label.

Neither NGC or PCGS had been served papers on the lawsuit. They have 20 days after they receive the complaint to file a response.

It has been said that “everyone knows PCGS first strikes aren’t really first strikes”.  At least that’s what first strike defenders would have us believe.  I admit that the dealers selling them probably know and that people frequenting the CU forums probably know, but what about the majority of the 140 million coin collectors out there?  How many of them know?  All of them?  I doubt it.  In fact I think it’s a very tiny fraction of coin collectors that know what a PCGS first strike really is.

I was browsing eBay and discovered a few big sellers advertising PCGS first strike coins.  They are misrepresenting them; whether it is done intentionally or not is anyone’s guess.  But they would have us believe they are NOT “in the know” on what a first strike is, or they’d like to fool buyers.  Either way, we can assume that someone doesn’t know, or they wouldn’t be acting like they don’t know to fool those that don’t really know.  Does that make sense?

Here’s a few I found in 5 minutes of browsing.

stopnsell

http://cgi.ebay.com/2007-W-PCGS-MS69-First-Strike-BURNISHED-Silver-Eagle_W0QQitemZ280131651985QQcmdZViewItem

stopnsell says:

“Plus you also get the First Strike label by PCGS. They own the Trademark name First Strike and are the only grader legal to have it on the label. That’s why NGC stopped using 1st Strike on there labels. You can only get the first strike grade during the 1st month of release! The first month also assures you get a coin with razor sharp full deep strike with bold details from the newest of dies at the Mint during production!”

This guy is wrong on many levels.  First, the PCGS trademark has not yet been approved as far as I know.  Second, NGC has been slabbing coins as “first strikes” since forever, until they recently changed to “early releases”, and as far as I know it wasn’t due to PCGS trademark.  But now notice how he defines first strikes the same as the dictionary defines it–the same definition as is generally accepted in the numismatic community.  That’s NOT PCGS’ definition.  PCGS defines first strikes as “first shipped”. 

Then there’s this seller, njsteves.  **link omitted because it screwed up parameters**

njsteves says:

“First Strike issue coins of any denomination, are the most desired because of the sharp details, higher reliefs, smooth fields and solid rims that are created by the fresher, clean unworn dies, making for the highest quality coins. “

He’s certainly right about what real first strike coins are.  Too bad his coins (in the PCGS first strike holder) are NOT first strikes, at least not as he has defined them.  Does he know this?  Who knows.

Finally we have papatcoins:

http://cgi.ebay.com/ws/eBayISAPI.dll?ViewItem&sspagename=ADME%3AB%3AAAQ%3AUS%3A1&viewitem=&item=200126831568&rd=1

papatcoins says:

“First Strike coins, are the most desired, because of the sharp details, higher reliefs, smooth fields and solid rims that are created by the fresher, clean unworn dies, making for the highest quality coins. “

Again, why bother stating this about REAL first strikes when he is selling a PCGS first strike, which is nothing of the sort?  It must be that he doesn’t know the difference, or he doesn’t want buyers to know the difference. 

 I say, does everyone really know?

I’ve got a discussion going on the forum:

http://www.theauctionwatch.com/forums/showthread.php?p=55748#post55748

Well, it’s not really an update, but I realize quite a few people are following this topic.  I just wanted to state for the record that I have no hard feelings about the banning.  I hadn’t paid much attention to David Hall’s weird announcement about “PCGS bashing will not be tolerated” before I said my peace on the “first strike” issue.  Ignorance is no excuse.  He banned me and I suppose since he did declare that anyone challenging PCGS would be banned prior to my banning, he did so justifiably.  That’s okay.  If I could locate Dave’s post regarding “PCGS bashing” I would link to it.  But anyway, I saw it on biddlesbank.com and can’t find it anymore there, either.

I do take issue with Hall’s assertion that the forums are a “favor” for us, and that he “loses money” on them.  While no direct revenue is generated by hosting a public message board, it is my contention that the boards increase trust between the customers and the company, add a bit of humanity to an otherwise faceless business, and generate submissions through discussions.  Therefore, the CU forums are most definately an indirect revenue source.  He’s not “doing us a favor” by keeping them.  He says that because he wants a reason to arbitrarily ban any user he wants without justification and continue to attract staunch PCGS defenders.  If the boards didn’t matter that much, he wouldn’t care so much about who is and isn’t posting there.  Of course they matter!  If he ever shuts them down, submissions and trust will plummet (which is why the CU forums will be around for as long as PCGS is around).

It has gotten to the point where there are few remaining topics of interest there.  It’s mostly talk about new mint products, speculation on how much they will sell for, and prayers that PCGS will “slab em in time” and that sort of stuff.  I enjoy intelligent discussions and when there aren’t any to be found I find myself making silly comments and being a clown.  Which is fine, but not really productive.  The first strike thread I contributed to was of interest to me and I would have really felt like a traitor to myself and the truth had I just said “first strikes are great!” or avoided it altogether.  So I accept the consequences of telling it like it is.  I doubt if I was less harsh I would have avoided the banning.  In any event, anything less than what I said would have been dishonest. 

Read this thread on Collector’s Universe to find a discussion on “first strikes” by kool-aid drinking CU members, as well as truth-tellers like me who ultimately get banned from the forum for telling the truth.

Threads like those and many like them exist on the Collector’s Universe forums, but what is never revealed publicly by the shady characters that own that operation is that truth-tellers are banned from the forum without notice, and no notation of “banned” is ever listed under the user’s ID or profile, so that the person is essentially silenced without anyone noticing.

And what we’re talking about here is PCGS’ dishonest coin labeling practices. Most specifically, their “first strike” pedigrees, that they erroneously place on all coins shipped to them within a certain time period after release by the US mint. It may be common sense to think that the first coins released by the US mint will also be the first coins struck, but the US mint has repeatedly said in press releases that this is NOT the case. They have repeatedly said that more than half if not all of a coin’s mintage is already complete by the time the first coin is sold to the general public, and they have also stated that they have no inventory system in place to determine when a coin was struck. Therefore, neither the US mint nor PCGS has any way of knowing if a coin is a first strike or not. So why does PCGS continue to label their coins first strikes?  To enable unethical dealers to con the public into believing they are really getting first strikes, that’s why!  Such a setup ensures constant submissions and $$$ flowing into the PCGS coffers.

Or maybe it isn’t deceptive per se, for you see PCGS decided to be clever in covering their tracks by TRADEMARKING the term “first strike” and REDEFINING it to suit their own purposes! Now, PCGS defines “first strike” as “first shipped”! Imagine that! I suppose if PCGS had invented the term first strike they could define it however they wish, but that is not the case. “First strike” is a long-established and clearly defined term within numismatics. Its definition is self-evident–it refers to a coin among the first struck on a new die. Even if we conclude there is no industry-wide accepted definition of the term, just reading the term “first strike” brings about the obvious definition to most people–coins that are among the first struck. It’s not that difficult to see why naive collectors believe that their slabs labeled as “first strikes” are among the first coins struck, and of course they also believe them to be of superior quality than coins struck at later dates.

PCGS’ anal position and staunch defense of their own dubious actions is what is wrong with corporate America today. The greedy corporate executives cannot bring themselves to admit what a huge mistake they have made, and their pocketbooks won’t allow them to correct the situation after the fact. Third party grading companies are ponzi schemes–they operate in profit only so long as more and more millions of coins are submitted each year, and when the coin supply dries up or have already been slabbed, they can only function through crack outs and resubmissions. To boost revenue, they play pedigree games and launch marketing campaigns with their labels. “First strike” is perhaps the most popular of these.

And what is so wrong with PCGS trademarking the term (or trying to, whether they succeed or not is a different story), and redefining it? Well for one thing, there IS a such thing as a “first strike”. As has already been covered, a first strike coin is a coin among the first struck with a new die. While the US mint does not have any way of knowing which coins are struck first, there are some exceptions. One such exception is the first day covers (coins encapsulated on cardboard along with a postage stamp and postmark)–these coins the US mint does specifically pull from the first day of production. Those coins ARE legitimate first strikes. So if PCGS or some other company decides “first strike” means “first shipped”, what do we call legitimate first strike coins? Perhaps we call those “first shipped” in some sort of bizzaro word term exchange?

Where does first strike come from anyway? Coin collecting has been a hobby ever since coins have been produced. Before modern striking processes of the latter half of the 20th century, dies were often poorly made and wore out very quickly, and they were often used long after their expiration date, as it were. Thus, first strike coins were always the most brilliant, had the best strike, the most detail, and sharper contrast to those coins struck later in the die process. It was always advantageous for the collector to locate a first strike coin to save in their collection. And so the term has its roots in classical collecting, and its definition should remain unmolested even though the modern striking process has invalidated the term. Today, dies last much longer and are replaced far more often, so coins are generally just as brilliant latter in the process as they are at the very beginning. Still, collectors and novices know what first strike means and they still believe those coins to carry a premium over latter struck coins. That fact should tell you what motivates PCGS in falsely attributing the term to coins on their labels.

Here’s the US mint press release on “first strikes”. Please read it:
US mint press release on first strikes

eBay guide:
PCGS bans users who tell the truth about First Strikes

eBay guide:
“FIRST STRIKE” Pedigrees are a SCAM, Beware of the LIE!

eBay guide:
“First Strike” 2006 Gold American Buffalo, Prove It!!!

basestealer blog:
PCGS (Collector’s Universe) FRAUDULENT COIN LABELING PRACTICES & COVER-UP

There are numerous resources available on the internet and in publications exposing this unethical company (Collector’s Universe) and the first strike scam. Too many to link here. But I would like to get the word out so if you see a link with excellent information, please forward it to me or post it here in the comments section.

This all just my opinion, of course.

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