I made it a bit tougher to take advantage of by adding a 50 points of health damage and a 50% slower mana regen to each cast of the spell.
So you can't spam the spell for gold ingots now. Well... you can, but you are either:
1. Gonna waste a ton of cash on potions.
2. Drain the rest of your magicka to heal.
3. Run out of magicka.
4. Die.

What do you guys think?

Anything to keep the game in check is okay by me

I really haven't found a use for Silver or Gold ingots, except to make jewelry, is that mainly what Silver and Gold is for?

I don't do any enchanting, I tried it once, but it was such a pain in the ass I've never bothered again.

I don't see anything wrong with the vanilla version of it. Sure, it's an easy way to get rich, but so is spamming petty-soul-enchanted-iron daggers.

Also, by adding hp damage to it, all you're doing is giving players another - and more profitable - way of leveling restoration. Get rich, AND build restoration, all in exchange for mana pots and some cash for iron.

You have a point. I will think on this some more. Actually, I'll sleep on it. It's been raining all day and I could use a nap.

Add a chance for the transmutation to fail, which starts off high and decreases as you skill Alchemy up. Failed transmutations should cause 1/5th of the skill gain and regular ones should be just the normal amount. It's kind of absurd to think that a level 1 alteration skill can flawlessly transmute iron into silver and silver into gold.

This feels like the only way to balance it, in my opinion. Other things I could suggest are among the lines of 2 iron for 1 silver and 2 silver for 1 gold, but that defies what alchemy (which is what transmutation is all about) in essence is. Alchemy really has no downsides that I can think of except that you could transmute incorrectly, and because of that you need to be knowledgable about it.

Slightly related: Ah, thinking about Full Metal Alchemist all over again.

If you do this, please get creative with the failures. Add charcoal or a giant's toe or something to their inventory, or spawn a goat or mudcrab at their feet every once in a while.

+1 for sudden goats.

Well, I thought of damaging you alteration skill 50 points for X minutes to deter abuse. However, I like your failure idea better. I'm not sure how to go about that without scripting or the CK at hand. Any ideas. (I am going to nap now, I promise.... *crosses fingers*)

Sounds excessively punitive, personally. It also doesn't make a whole lot of sense to me for it to hurt the player.

Perhaps you could accomplish it more simply and directly by just increasing the Casting Time a whole lot? Or you could have it apply an inconsequential, long-lasting secondary effect, (like -1 Max HP for 6 hrs) and add a condition for TransmuteOreMineralEffect like

Function - HasMagicEffect
Param1 - SecondaryEffectName
Param2 - 0x00000000
Operator - !=
Value - 1

Then you couldn't do anything with it until SecondaryEffectName ran out.

I love the failure/odd effect idea Like that spell chain from the student in the CoW

It looks like the "transmuteoremineraleffect" that the transmute spell applies is probably a script effect, or a hard coded one, so I don't think it can be changed until we have the CK. Once that is out though, I have another request as long as you're messing with the transmute spell. At present, if you're trying to create silver rather than gold, you have to remove the silver ore chunks from your inventory as they're created (the spell transmutes silver to gold before it will transmute iron to silver.) Swapping that would make the spell a bit more versatile by letting you create silver, then gold.

Maybe make transmutation require an additional (rare) element? Control transmutation by controlling that element. And fail in hilarious ways if you forget it.

IMHO, transmute needs no mod cause it's already somewhat a pain in the ass. To get from iron to gold, you have to constantly cast and drop.

I think the transmute spell is a way to obtain some proffit from mines and ore trading for people that didn't use crafting skills (which are waaaaay more profitable). Can't see the need on making it less viable.

Drop what?

Maybe a failure could transmute the silver/gold into an ingot of lead... which has a value of 1, and is useless?

I laughed....
Make the goat hostile, though... possibly even spewing fire from it's nose?

What I meant was to get iron to silver only. This is to forge silver ingots for jewelry. You have to drop inbetween casts so as not to transmute the silver to gold.

I think it should be more along the lines of percentages to get iron to anything else, or have a specific transmute iron, or transmute silver spell, where the affect is a percentage chance to transmute the iron into something else

silver, gold, ebony, some other metals, where the higher the cost the base ingot is the lower the percentage chance, with a relatively high percentage chance that the iron stays iron and possibly creates other funny and humorous happens as well

The game clearly needs more hostile, fire breathing goats. I'd also request that the occasional non-hostile fire breathing goat or mudcrab spawn, and follow you around defending you with their life, which, after all, is entirely thanks to you.

as well as this you could change the battle music while the goat is following you to the chicken dance, or you could have a chicken that breathes fire, but that would require changes to its skeleton XD
http://www.youtube.com/watch?v=vdFIXsrjkXI

No to create silver you has to drop the silver ores or they get converted to gold the next cast.

Just get rid of the spell. I mean, it doesn't really make any sense anyway. If such a spell really existed and was only adept level then silver and gold would be super common and near worthless from all the wizards trying to get rich quick using it.

If you really don't want to get rid of it though, you could also try making it a master level spell and greatly increase it's mana cost. Or make it sacrfice an ore to upgrade another, so you'd need 2 iron to make 1 silver and 2 silver to make 1 gold. Either would make the spell much less abusable.

I like this idea.
Not as much as the fire breathing goat manifestation, but still a great idea.

Again, I like this idea, but it makes no sense with what transmutation is. Transmutation is turning one thing into another -- an act of alchemy, of equivalent exchange. If you use two things, you get two things in this process. So 2 for 1 is nonsensical in the theoretical sense. Failing transmutations, however, is very reasonable, since alchemy is something that requires skill and practice.