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With the addition of Steel there are some additional wrinkles in converting one type of resource into anther.

Resource conversion guide
From To Do this
Gold Water Build and level up Wells, build Reservoirs to hold the water and level up Town Hall to get more or higher level Wells and Reservoirs.
Water Gold Build and level up Gold Mines, build Gold Vaults to hold the gold.
Water or Gold Honor Badges Quest Board donations.
Gold Blue Crystals Buy bags of Blue Crystals from the Lost Realm Merchant(125:1) or the Guild Caravan.
Blue Crystals Steel Craft actual armor (not damaged equipment) at the Workshop with Blue Crystals and sell these in the Workshop for Steel. Conversion rate averages to 40 Blue Crystals for each unit of Steel.