Tony is fishing by the river, when Cico arrives. Cico agrees to take Tony and show him the golden carp, but only if he agrees never to catch carp. Tony swears he never will. On their way they pass the house of Narciso, and Tony marvels at the beautiful garden there. They encounter some of Tony's friends on the street and they tease him, asking him whether he has a bruja in his house, since they have heard of the miraculous healing that Ultima performed.
Cico and Antonio sit by a large pond waiting for the golden carp to appear. When it does, Tony is amazed by its size and beauty. He watches in awe and feels he has witnessed a pagan god. After the carp disappears, a black bass breaks the surface of the water. Cico throws a spear at it but misses. Cico tells Tony that the golden carp swims back up to the lakes of the Mermaid, the Hidden Lakes, which have a mysterious power. Tony must never to go there, because it is dangerous. Cico also tells Tony that the golden carp will one day rule the land. This is because the sins of the people will become so great that the town will collapse and be swallowed by water. He explains that the town is surrounded by the river and the creek, and underneath it is a large underground lake.
Tony is saddened by his new knowledge. At night he has a dream about the baptismal waters of Christianity (associated with the moon) and the natural waters of the sea, which belong to the pagan world. He does not know which he belongs to, and his parents are in dispute over it. There is a storm and he fears that the doom that Chico predicted is about to happen. Then Ultima stills the storm and explains that there is no conflict between the two kinds of waters. Everything is interconnected as one.
Tony's exposure to pagan myths continues, and his encounter with the golden carp only fuels his vivid imagination still further. His dream, at the end of the chapter, shows how much his mind is troubled by what he feels are contradictions in the belief systems he is being presented with-Catholic Christianity on the one hand, and a radically different kind of pagan myth-based religion on the other. (Although they are different, they do both make use of the concept of sin, and the flood that is to precede the rule of the golden carp echoes the flood recorded in the book of Genesis, when God punishes man for his sins.)
Ultima's resolution of the problem is in keeping with her earlier teachings to Tony of the oneness of all things. To her, there is no conflict between the pagan and the Christian views; they are just different aspects of the same one reality, which is the sacredness of all life. But Ultima speaks this truth only in Tony's dream. Her advice to him in reality is that he must find his own truth. This truth is what he continually searches for as the novel continues.