I came to know that there was a “gold shortage” in Britain, after the pound was linked back to gold in 1926 at the pre-war parity of $4.86. The reason: Britain had inflated a lot during the first world war, and the value of the British pound had fallen down to something around $3.40 with respect to gold. So, the undervalued gold was hoarded either by the English citizens or foreigners - causing the shortage.
I don’t quite get why this hoarding of gold would happen. If pre-world war 1, one pound was equal to a certain amount of gold (guess it was 1/5 ounce?), just like how one meter equals 100 centimeters - basically the relation between pound and an ounce of gold being a mere unit of measurement, why would there be any perception of a undervalued gold at all when the supply of pound is increased–hence making people hoard gold? In other words, why would anyone in the black market value 1/5 ounce of gold at anything more than a pound, if the relation between gold and pound was really accepted as just a matter of mere relation between two units of measurement?