I have found that the best and most effective spot in the game to farm for medallions is in Green Hill Zone act 2. Since this location is so early in the game it makes extremely easy to utilize. Below is a video demonstrating where to go in order to do this method of farming.

The best location to farm for medallions is in Green Hill Zone act 2. It is approximately halfway through the level. You will want to try and stick the to the upper most path. You will run across a save point, this is the first medallion location. Then after you have done this special stage go to the right and go through the automated 'S' curve. There will be a loop that leads to a rock with a spring; hop over the rock and hit the save point. After completing this special stage use the rock spring to go left and return to the original save point. You can repeat this process indefinitely.