When it costs resources to repair a dull tool, it works fine. I made a post a while back concerning this subject.
To balance the economy, everything must have enough uses that it can be consumed. Otherwise you have a flood of ether indestructible/unsellable junk. Only a percentage of players smart enough to turn a profit from their time and a small percentage of items worth gathering or crafting for money. (I’m looking at you Runescape and Minecraft)
How to allow for a consumable economy:
Everything has a recipe or multiple recipes that craft useful items. This requires careful thought before introducing new items and the rarity of the items. (Rarity meaning how hard is it to acquire)
The ability for these items to be consumed readily. Potions, food spoilage, (You shouldn’t be able to have 1,567,789 tuna sitting in your bank you forgot to flip for a profit 3 years prior) Typically the big problems revolved around large masses of smaller items. ‘Junk’
Every object of mortal/lower tier sapients design will (Eventually) wear out and break. This can be accomplished with an increasing cost of repair (In resources or time) to the point of it being cheaper to make a new one. Having no repair mechanic at all makes little sense in a realistic universe, particularly for high tier items.
Gold? Silver? Why? The real properties of these items would make terrible tools. Golds density, malleability, and rarity (At least in earths crust) offer no benefit to the tool user. (A small brick of gold could weigh 40 kilos)You mineaswell make lead tools, it would be cheaper. Or a metal from the platinum family, more expensive but harder. has other uses, just not as a tool.
Silver is similar, it has medicinal and electrical applications but would make a terrible tool.
Sapphire and other hard stones are exactly that, they are hard. A tool needs to be tough. If you drop a ceramic mug and a plastic cup on the tile, which will survive?
Iron? You mean low grade steel? Pure iron is dense, hard, and readily succumbs to oxidation. There are over a hundred different steel alloys.
Titanium, ah. Titanium or titanium alloy would make great armor, tools and weapons. It’s susceptibility to corrosion ironically protects it by quickly forming a protective barrier on its skin. It is about 40% lighter then your average steel. It’s tough, and hard. (Some steel alloys have superior toughness/hardness qualities then titanium)
Other candidates: Aluminum, bronze, tungsten, chert, nephrite jade, bone, obsidian.