The posse decides that the best way to Santa Fe is to ride down the east side of the Sangre de Cristo mountains, following the Old Spanish Trail, rather than blazing their way through the mountains to follow the Rio Grande valley. Cady spends a while trying to get a mysterious box open, but she won't allow it to be broken open. Bart manages to break off a pin trying to pick it, and stick the jagged end into his palm.
Traveling south all day, they run into a man named Hutch Brodie, who is driving a steam wagon heading north. He warns them about the bandit Red Warburton. They decide to keep watches, but continue south along the trail anyway - there aren't lots of options for them in any case.
Unfortunately Bart puts Cady to sleep with a really bad story on first watch. They awaken in the middle of the night to Ginger the dog's barking, and find themselves surrounded by Apache warriors. They play it cool, and eventually the war chief shows up and tells them to take their devils out of Apache land. James asks him if there's any way to get rid of the devils, and he says he doesn't know. The posse promises to head south, and this results in one last warning - there are other bad spirits in the south. Don't let your devils talk to those devils.
The next morning's travel is interrupted by the attack of a wolf on the trail - but a wolf covered with some sort of oily black, opalescent, writhing slime. Cady kills it with a spell, but is hit on the leg with a gout of slime (causing her horse to throw her). The slime leaves a disturbing gray patch on her leg, and on the horse. They decide to press on to Santa Fe as quickly as possible.
Unfortunately, that afternoon brings Red Warburton down on them. They see him coming and have time to take cover in a dry wash. Elder Tanner says his "sister" (Cady) is sick, and he's taking her to Santa Fe, and they don't want trouble. Perhaps the twenty banditos with Warburton, or his gatling pistol, make this seem like a good idea. Warburton is willing to let them go, as long as he gets all their money. Elder Tanner gives up his money, and everyone else is reluctantly going along, when Crowell recognizes Warburton's second as a man named Lewis. Lewis and some others invaded Crowell's peaceful Arizona town and killed everyone, burying Crowell alive.
Things degenerate quickly. Crowell accuses Lewis of killing women and children, but neither Warburton or the banditos seem to care. So Crowell draws down on them and quickly the posse have killed four and wounded two more. Lewis and Red are among the dead. Crowell has been seriously wounded, shot through the shoulder, and is bleeding heavily.
In case the posse didn't already realize that Elder Tanner was special, he lays hands on James and takes the wound to himself, where it quickly heals and vanishes. The posse then buries the dead bandits and takes the gatling pistol - which proves to have no ammunition!
The next morning Cady finds the gray spot on her leg larger. She casts her fortune and sees Bart consulting the silver pendulum, the nearby mountains, a fountain of black slime, a cave, and a gold cup with pure water in it. She asks Bart to consult the pendulum afterwards, and it is indeed pulling into the mountains rather than southwest like it has been. The posse decides to ride into the mountains, hoping the cup can somehow cure Cady (and besides, it seems like there's a coin there). They hang the two banditos rather than take them along. It's a fun morning.
They wander a bit getting up into the mountains and finally find a road. Tobey is bitten by some sort of small animal dripping with the slime, and ends up with a dime-sized blotch of gray on her collarbone. Riding up the road, they find a logging camp with friendly, but scared, lumber-jacks. The lumber-jacks have been isolated here for several weeks since the horrible animals started coming around. They suspect it was caused by some miners working further up into the mountains. The posse partakes of their hospitality, eating flap-jacks from their automatic flap-jack machine and marveling at their steam-powered chainsaw. That night, as everyone huddles in one of the bunkhouses, animals scratch and batter at the walls.
In the morning, they leave the horses behind and head up a trail to the mine. On the way there, they are attacked by two horrible bears, shambling masses of slime and writing tentacles that immediately send Bart running like a jack rabbit. Everyone else sticks it out, finding out that you can't put these things down with bullets unless you get a good shot to the head. James is knocked down by a tentacle of slime, but is mostly undamaged. Finally Elder Tanner stands in front of one of the bears and it breaks its arm on him, slime splashing around him but miraculously not touching him. Then he sticks his revolver up into its mouth and puts it down. Everyone is impressed.
They retrieve Bart and go on to the mine, finding it just after noon. There are three dilapidated shacks, some fallen tents, and a mine entrance. The pendulum points north, the mine is west. The whole area is oppressive - the mine encampment huddles in the shadow of a great cliff, and the air is still and silent. The posse decides to go into the camp and see if one of the shacks can be made defensible. Of course, when they open it up, out shambles a man covered in slime... others emerging from the other shacks and from the mine. It looks like the mine should have been called ambush gulch.