Well, Charlie posted something very much like it, though your example looks better crafted. I have seen quite a few over the years on forums and at coin shows, people were wonderfully creative back then and they often encased coins in buttons, cameos, cuff links ect. This style due to its weight may not have been optimal for wear, really doesn't necessarily have to have a purpose but obviously someone decided it was worth the time and effort to create. Wear on the high points of the obverse [and it would stand to reason that it was in mint condition when fashioned, don't think anyone would use a trashed, circulated coin for something like this] suggests it was pressed in, and a very nice fit.
