In 1536, physician and alchemist Theophrastus Phillippus Aureolus Bombastus von Hohenheim, known as Paracelsus, apparently succeeds in synthesizing gold from lead and other base elements.

When word of his discovery leaks out and his efforts are duplicated, panic sweeps Europe at the prospect of a financial collapse. Particularly hard-hit is Spain, which had been levering its expropriating of Aztec and Inca precious metals to increase its political power. With alchemical gold far cheaper to produce than natural gold is to mine and refine and impossible to tell from the natural product by sixteenth-century methods, the bottom drops out of the gold market.Curse of Paracelsus
by Eric LippsChurch condemnation of alchemy is greatly strengthened, leading to a wave of arrests and executions by the Inquisition, including the death of Paracelsus himself in 1539. The fledgling science of chemistry is placed under ecclesiastical supervision; thereafter, only priests will be permitted to carry out research in the field. The Church's prohibition of alchemy, however, does not prohibit Spain from using alchemical gold--and later, alchemical silver--to undermine the economies of its political enemies. England's Henry VIII, for example, is forced from his throne after defying Rome by divorcing his wife Catherine of Aragon to marry Anne Boleyn. In the "starving time" which followed the Papacy's authorization of economic warfare, Henry sees his country's currency turn worthless. Finally, his brother-in-law King James IV of Scotland attacks and defeats Henry's remaining supporters, and is crowned King of England in Henry's place. Henry is shut up in the Tower of London, where he will die in 1547.

The economic chaos in Europe will slow exploitation of the New World; the first English settlement, at Roanoke Island, will not be established until 1651. Also delayed will be scientific progress, as direct Church control spreads from chemistry to all fields. The one exception is in chemistry, where the Vatican supports a research program aimed at developing alchemy and at eventually finding a way to distinguish alchemical products from their natural counterparts. The result is an "arms race" between alchemical synthesis and chemical analysis which will not end until 1887, when Bishop Ernest Rutherford demonstrates the use of spectroscopy to distinguish infallibly between alchemical gold and natural gold. As Rutherford shows, and as had long been accepted by alchemists, alchemical gold has not really been transmuted; instead, it is a chemical amalgam whose properties mimic those of the natural metal almost exactly. The same is soon demonstrated for other products of alchemical "transmutation".