Sometimes this effect is caused by someone grinding off the periphery of the coin. However, if the coin is normal weight, then the most likely explanation is that this nickel was struck on a blank rather than a planchet. Lacking the proto-rim imparted by the upset mill, the peripheral parts of the design and the design rim have trouble striking up.
Nickels from this time period are particularly susceptible to this kind of weakness, as both dies are strongly convex in vertical cross section, with the convexity strongest at the periphery of the die.
Error coin writer and researcher.
Edited by mikediamond
01/20/2012 4:00 pm