Ryu ga Gotoku Kenzan Substory The Golden Sword
3CH.6 - Anytime - Suburbs to Mountainside path
At the west end of Shijou, two men are talking about the waterfall and a legend of a golden sword therein. Go to the blacksmith's and talk to the man there; he'll give you a Useless Iron Sword.
In daylight, bring it to the waterfall, located in that path running off from the Mountain Path. Choose to toss it in (with the top choice). When you star to leave, a woman appears and asks if you threw your sword in. She first offers the golden sword. Say "no" with the bottom choice. Next, she offers a silver sword. Say "no" again, again with the bottom choice. She'll leave.
Next, run back to the point where the path to the waterfall diverged from the
main path and talk to the two, who are laughing it up, and having a good time.
The lady is making fun of the people who just stand there, throwin their swords in the water over and over. She says that it just goes to show the power of greed, since to a swordsman, his sword is his very life.
Beat the man up to get the Golden Sword and the Silver Sword.
Reward: Golden Sword, Silver Sword Experience: 1,000