It's the world's reserve currency, true. But how hard is it to turn dollars into gold? It takes like two days and is practically free. It's not like there's anything stopping countries from going off the dollar and onto gold. It could happen in a week, and no individual country shorting the dollar would incur any cost.
There's about three trillion worth of gold, not all of it for sale of course. But there are enough precious metals for a lot of dollar holders to get off said currency if they feel it is not in their interest to keep it. Alternatively, they can buy machines to dig for gold or invest in publicly traded gold companies, which also amounts to shorting the dollar. This might not be easy or even possible for China or Saudi Arabia, but it is certainly possible for Egypt and other small countries with US treasury bonds. If a few countries short the dollar, the price of gold in dollars would rise accordingly, making gold reserves enough to accommodate the next few stages of a run on the dollar.
A steep increase in the price of gold would carry horrific consequences in human suffering and environmental damage. http://ngm.nationalgeographic.com/2009/01/gold/larmer-text
Even if our current fiat currency system is untenable we have to find a better solution than a gold standard.
That seems true but it's not. If any country with large dollar holdings were to begin dumping them, they'd saturate the market and devalue the rest of their own dollars. For instance, if China were to begin dumping dollars, it's estimated they could sell maybe 25% of their holdings before the remaining 75% were worthless.
So, with the same reasoning, no one with many shares of a company would dump them? China's been divesting dollars for a while and will dump to get that 25% if it has to.
