Cousins William, Mary, and Alice stay at their uncle's old house, Golden House, and discover a hidden room where they meet Stephen Tyler, a 16th-century magician who has travelled through time. They must help him protect the valley from his wicked apprentice, Matthew Morden, who seeks to disrupt the magical and ecological balance.
Back in the 17th Century, the Magician's apprentice tries to harness the power of electricity but an explosion in his lab accidentally creates a dangerous substance called Black Gold and forces the Magician back to his own time, losing his precious gold pendulum. Meanwhile, in the present, a large corporation is planning to build a theme park close to Golden Valley, which would destroy the rare and beautiful surroundings.
William takes the Magician's lost pendulum from Mary and, enthralled by its power, helps Morden travel from the past into the present. But he is unaware that Morden has brought a piece of the Black Gold with him, or of its dangerous ""negative energy"".
As the evil Black Gold spreads its negative energy throughout Golden Valley, the children become desperate for the Magician's help. But without his magic pendulum he seems stuck in the 17th century, until he remembers that there may be another way to travel through time to the present. Mary is horrified to discover that Mark, the object of her first crush, is a descendant of Matthew Morden.
With the Magician trapped in the dream world and fading, the children's only hope is to find his lost pendulum. Meanwhile, after William reveals Meg Lewis's role in forestalling the theme park's development, Meg is in grave danger.
After Mary and Alice rescue Meg from the fire, the children desperately search for a lost deed that will prove the Mordens only own the Lewis house and not the land of the Golden Valley, but ancestor Matthew Morden thwarts their efforts using the Black Gold's evil power.
After his life is saved by William, Matthew Morden comes to realize that the children are not his enemy. But can even the combined efforts of the former adversaries reverse the Golden Valley's destruction and destroy the Black Gold forever?
