For millenia it was a goal of princes and alchemists to produce the Philosopher's Stone, a device by which common metals could be transmuted into gold. To modern people who know about economics, it seems a waste of time -- though gold does have some intrinsic use, most of its value is due to its scarcity and use as a means of exchange. If some medieval genius somehow did contrive to make such a Stone, it would give far less wealth to its creator than might be naively expected, because prices would soon rise to match the increased supply of specie. People with savings would also be ruined by the inflation.

However, I understand that this conception of money and value is quite new in historical terms, and was not commonly known in ages past. People knew that debasing coinage led to inflation, but that isn't quite the same as this, since someone might still naively think that a pure gold coinage would retain its value forever. Who was the first person to point out to the alchemists this specific aspect of their folly?

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    What you describe as "soon" would nonetheless be long after the inventors had built wealth. – Aaron Brick Nov 30 '18 at 19:40
  • Transmuting gold in a gold-based economy would be like being able to make perfect forgeries of currency today. – Gort the Robot Nov 30 '18 at 23:59
  • This is somewhat similar to the unexpected effects of the influx of gold and silver that Spain experienced in the 16th century from its New World mines. – Mike Dec 3 '18 at 4:15
  • You may want to have a look at the way diamond prices are maintained – user31561 Dec 4 '18 at 12:46

No one. Because even as a mental exercise, this exercise isn't a well formulated one.

It is all a question of what the cost of transmutation is.

If there were no cost to transmutation, like the Midas touch, then yes, it would make gold as cheap as the cheapest metal.

But if transmutation requires a particle accelerator, or high energy laser (https://www.technologyreview.com/s/423107/how-to-transmute-elements-with-laser-light/)... then the cost of transmutation may be many many times the cost of digging gold out of the ground, making transmutated gold many times more expensive than natural gold....

Ultimately, no serious policy maker/economist/theorist worry about this question, as we do not have the ability to create gold in any meaningful quantity (by that i mean more than a few atoms at a time).

And if you really want to theorize the impact on prices of transmutation of gold, you should look at man-made diamonds.


If you are a man looking to buy an engagement diamond ring, you would be rather disappointed by the effect of man-made diamonds on the price of that tiny shiny cut stone.

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No-one, because you don't go blabbing to people how you did it! E.g. some people think the Voynich manuscript is coded version of someone's attempt. Isaac Newton wrote about his intermediate steps, one of which was called 'the green lion'. What did that mean? Who knows! But we can deduce that since he was so secretive about his rrsearch, if it had been possible for him to find what he was looking for he certainly would have told no one. https://humtech.ucla.edu/event/liberating-the-green-lion-unsolved-mysteries-of-isaac-newtons-alchemical-practice/

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  • It was much easier to keep a technological secret in those days. Suppose you had made a functional philosopher's stone. If someone got hold of a sample, they would have no idea how to find out what it was. These days the thief would have the stolen sample analysed using a mass spectrometer and other standard equipment. Lots of chemicals, such as dyes were protected by simple secrecy. For example, people knew what plants to use to obtain indigo (used today for jeans) but those who knew how to purify to make good-quality product were able to protect their method with secrecy. – David Robinson Dec 1 '18 at 1:50

Transmutation of gold would not be useless to those who had know-how to do it

First of all, you need to know that even in case of paper money, does who have ability to "print" (or rather to create) it, and those who receive freshly created money benefit the most. Concept that explains this is called seigniorage. In modern times, FED loans money to certain banks at much lower rates then usual. This is called Discount Window. Those banks could then loan that money to the FED at higher rates and thus earn, or lend it to general public again with higher interest rates.

Now, in your case, if someone had technology to create gold from let's say lead and if the process was profitable (cost of process less then cost of created gold) , newly created gold would increase monetary supply (inflation), but it would still benefit gold creator. To simplify, imagine there is only $1000 on isolate island. Someone brings another $1000 - prices rise (double) but that person still has half the money available to population.

Only case where seigniorage doesn't work would be if everyone had ability to create money. Historically and practically, this doesn't work - counterfeiting was declared a crime and punished severely from ancient times. In your case, if everybody had ability to create gold it would lose its status as a monetary metal. But, it is highly unlikely ancient alchemists would divulge the secret (complex and requiring occult knowledge) to everyone, or that general public would understand the process even if told.

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