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Alchemists do not turn lead into gold; instead, they create magic potions. High level Alchemists can learn Glassblowing, and with Alchemy Recipes, craft 3 special potions and 1 decorative item.
As your skill improves you gain an Enhance Potions bonus of 1% for every 3.3 skill points achieved (30% at 99). This is on top of any bonus given by your equipment and hence not subject to your equipment cap (granting you a maximum benefit of 80%). The skill also ensures you always have an effective Enhance Potions value of at least your Alchemy skill divided by 2, regardless of your worn equipment.
Trained alchemists can identify the contents of Potion Kegs by removing a potion from them. Once checked in this way, the potion type becomes visible to all players.