Two prospectors, one the father of Sky "Lightning" Bryce and the other the father of Kate Arnold, find a large gold deposit belonging to an Indian tribe. They head for home but each sends a note to their respective off-springs advising them of their good fortune. One of the fathers conceives a plan of taking a dagger and wrapping a piece of string around the blade, after which he prints on the string with a lead pencil, the exact location of their find. If something happens to them, the string goes to the son and the knife to the daughter. That night an Indian approaches their camp and blows some mysterious wolf powder which causes a man to see wolves in place of human beings. Lightning's father see his partner as a wolf and stabs him to death; later he is brought into town in a dying condition but before dying, hands the knife and the string over to the sheriff with instructions to deliver to Lightning and Kate.