When Spanish conquistadors heard religious lore from what is now Colombia at the northern extreme of the Andes mountains, they concocted a legend of "the golden one", El Dorado, who leapt into a lake with his body covered in gold dust. They reasoned that the land of El Dorado must be a place of fabulous mineral wealth, where pure gold leaked out of the rocks.

This arresting exhibition reveals the truth behind that myth. The peoples of ancient Colombia really did use gold extravagantly and beautifully in their sculptures, body ornaments, rituals and grave goods. When their priests or shamans ingested coca to help them commune with the spirit world, they released its narcotic properties by mixing it with lime which they carried in gorgeous gold pots and sampled with a golden dipper.

All of which might seem to disconcertingly validate vulgar fantasies of a land of gold and cocaine. But the reason the Tairona, Muisca and other peoples of the northern Andes made such copious use of gold in everyday life was that it was not, for them, a crude symbol of wealth. It was holy and alive. Gold glitters. The way it caught the light mirrored the divine power of the sun: if you wore a gold headdress and gold breastplate it brought you nearer to the sun's magic.

Seated Quimbaya female poporo (AD600-1100). Photograph: Trustees of the British Museum

Lovely golden models and masks of jaguars and frogs and bats bring to life the natural world that surrounded Colombia's ancient peoples. This was not an urban empire like the realm of the Aztecs. It was a world of carved megaliths and ritually scarred bodies. Its culture is brought powerfully to life by the exquisitely cast votive statuettes called tunjos that are the show's most evocative artefacts. These gold figures depict characters such as warriors holding severed heads and religious leaders with their coca-chewing gear. They are extremely potent artworks.

Behind the greedy European fable of El Dorado lay a human richness. A way of life that fitted into the natural world and saw gold as just one way to evoke the magic of the cosmos was reduced, in European eyes, to a yellow blaze of materialism. This exhibition challenges the poverty of our imaginations.