It baffles us that the "real" Olympic committee squanders thousands of dollars on medals when they're so easy (and inexpensive) to make.
2 cups all-purpose flour
1 cup salt
1 cup water
gold spray paint
silver spray paint
bronze spray paint
Combine flour and salt in a bowl and mix well. Add water gradually, stirring, until the dough forms a ball and is easy to handle. You may not need to add all the water if the dough seems soft enough, so don't dump all the water in at once. Have your child knead the dough on a lightly floured surface, until smooth - about 5 minutes or so.
Now comes the tricky part (probably the real reason Olympic medals are so valuable). Cut a potato in half, crosswise. Using a marker or soft pencil, draw a design onto the cut surface of the potato - this will become the stamp used to emboss your medals. We always emboss our medals with the year but you have to remember that the writing will turn out reversed when you stamp it into the dough, so you have to write backwards. With a very sharp craft knife or something similar, cut around your design (definitely an adult job), leaving the raised portion as a stamp.
Roll the dough out onto a floured surface, about ¼ in. (0.5 cm) thick. Cut into circles using a 2 in. (5 cm) cookie cutter or drinking glass. Now, here's where the kids come in. Emboss each circle of dough by pressing the potato stamp into it, gently but firmly. Cut a hole in the top of each medal for hanging (use a drinking straw), and place on a lightly greased baking sheet. Bake at 250°F (120°C) for 40 to 45 minutes, until the medals are firm and dry. Let cool.
When your medals are thoroughly cooled, spray-paint them with gold, silver or bronze paint, giving each medal 2 or 3 coats (it soaks in). You can paint the medals with a brush and poster paint, but I recommend that you give them a coat of urethane afterwards so the colour doesn't rub off. When they're dry, string them onto long loops of yarn or ribbon to hang around the triumphant athletes' necks.