|Exactly, Sam! Unfortunately, the alleged shortage of gold in exchange for dollars is a common misconception. |
Edison's comment, "If everybody in the United States suddenly demanded gold for their money, there would not be enough gold" is silly, of course. If everyone demanded gold in exchange for dollars, the dollar price of gold would rise to the point at which the supply of gold equals the demand for it. The only way there'd be a shortage of gold is if a price control were placed on it.
Of course, if a conversion of dollars to gold were to catch on, it wouldn't happen suddenly, but over time; the transition would be a gradual one, and the rise in the dollar price would be gradual. Moreover, the higher price would spur the search for new deposits of gold ore and an increased production of gold, which would temper the rise in price.