About the gold: It is slow going in the beginning. But you are doing everything right. Dig, dig, dig
Even on impossible you will get rich so long as you keep you casualties down. Chests will be more lucrative on higher-level islands. During the entire game you will earn at least 1M gold.
Your note about the Black Dragon is correct. The only thing I know of that can save your black dragons are the Ressurection skill of the Paladin class.