What is a gold bug?
October 29, 2004

What does a short story written in 1843 by Edgar Allen Poe have to do with being a gold enthusiast?

In Poe’s story, called “The Gold Bug”, the main character is a moody chap by the name of Legrand, who discovers a rare “gold bug” (a beetle). After being bitten by the gold bug, Legrand leads the narrator on a treasure hunt, which, in the end, is fruitful, netting a large chest filled with gold and precious jewels.

About fifty years later the United States was divided: farmers and miners in the west wanted “free and unlimited coinage of silver” while Republicans in the east wanted to remain on a gold standard. In 1896 the US presidential election hinged around whether the US would remain on a gold standard or adopt a bimetallic monetary system. It turned out to be one of the most controversial elections in US history.

The presidential candidates were William McKinley and William Bryan. Democrat Bryan wanted the United States to use silver to back the dollar at a value that would inflate the prices farmers received for their crops, easing their debt burden. This position was known as the Free Silver Movement. Facing a tough contest (Democrats had the White House for the previous term and were blamed for the depression of 1893), Bryan decided the best strategy for a Democratic victory was to bring his message to the people by speaking in person around the country. This was a new tactic, since presidential candidates traditionally stayed home and let others speak on their behalf.

Another political campaign tactic that made its debut in this election was the campaign button that consisted of mounted paper images protected by a thin coating of celluloid. McKinley supporters took it a step further and sported brass pins depicting a bug, and referred to themselves as “gold bugs”. The Democrats followed suit, with silver bug pins. Whether the bug reference had anything to do with Edgar Allen Poe’s gold bug I don’t know, but I could find no other reference to a bug that had anything to do with gold.

McKinley won the elections, defeating Jennings in the greatest electoral sweep in twenty-five years, and put an end to designs of a bimetallic dollar standard. He also, by the way, led the US into its first international war with a European power since the war of 1812 by aiding Cuba in its struggle to throw off Spanish rule. To secure a position in the Pacific McKinley annexed the Hawaiian Islands and after defeating Spain, the US gained control over the Philippines, Puerto Rico and Guam. It was the beginning of the American Empire.

About a year ago I caught a glimpse of a gold bug crawling up a friend’s suit. The friend was Brien Lundin, president and CEO of Jefferson Financial and editor of the Gold Newsletter. Brien had exact replicas of the 1896 gold bug pins cast in twenty-two carat gold.

The term “Gold Bug” is still used to refer to supporters of the gold standard and investors who buy gold, which, I guess, makes me a gold bug too. I was therefore amused when I saw Brien’s gold bug and after I learned that he was making only a few of them I decided to buy one. My wife hates it, but I think it’s great. Here it is:

I don’t know how many Brien has left, or if he’s going to make any more of them, but if you’re interested in owning a “real” gold bug I suggest you give him a call at (504) 837-3033 or (800) 648-8411.

Paul van Eeden

Paul van Eeden works primarily to find investments for his own portfolio and shares his investment ideas with subscribers to his weekly investment publication. For more information please visit his website (www.paulvaneeden.com) or contact his publisher at (800) 528-0559 or (602) 252-4477.

