In the troll lair under a bridge in London, England, the members of X-Factor lie unconscious on the stone floor. Nathan Christopher crawls on the floor by his father and Jean while the trolls look on.
The trolls tell Thomas, their mutant captive, that he must do their bidding or they will kill X-Factor. With their plans of destroying England’s economy in place, Phay shape-shifts into a dinosaur to lift Phy, Phough, Phee and Thomas to the hatch in the ceiling. They emerge from under a tombstone in the cemetery. Phy is worried about their plan, but Phough tells him they will get the Englishmen’s attention through greed and fear.
Phay and Phumm are left behind to guard over their unconscious prisoners. Phumm mutters that they were left behind because he is a fool and Phay is a coward. Phay moves to claw at Beast, but Phumm reminds him X-Factor are their hostages. Disregarding him, Phay lifts his dinosaur foot and starts to stomp down on baby Nathan. Amazingly, a force-bubble appears around Nathan and the impact merely bounces him away. Perturbed, Phumm goes after the baby to try and squash him. Jean regains consciousness and telekinetically throws the two trolls away from Nathan, unaware of the force-bubble Nathan created around himself. The others wake up and Cyclops blasts them free of their chains.
Iceman forms blocks of ice around Phay and Phumm’s feet, knocking them off balance. Beast angrily strikes out at Phumm, knocking him out cold. Phay, who has shifted back to his normal form, is now alone and frightened and lost among all the gold.
Jean picks up Nathan and holds him protectively. Scott tells the others they had better find Thomas and the other trolls before they destroy London.
High in the sky over London, the trolls and Thomas ride on Phee’s flying carpet. They are trying to decide where to strike first. After considering Big Ben and the Pagoda at Kew Palace, they settle on the White Tower, the oldest part of the Tower of London. As they approach the Tower, Thomas refuses to turn the national treasure into gold. Phough yells at him to do it and angrily slashes out at a dog when it starts to bark at them. Thomas rushes to the dog’s side, feeling responsible. He doesn’t want the dog to suffer in pain, so he lays his hands on the dog and thinks of…gold. Thomas is stunned by his power to turn the dog to gold, but this event has given the trolls a terrible idea - they can use Thomas’ abilities on a living being!
The trolls and Thomas approach Buckingham Palace and tell the guards to take them to the Queen. The guards fire their rifles, but they have no effect on the powerful trolls. One guard runs to call for reinforcements while the other is grabbed by Phee, who demands to be taken to the monarch. The guard tells him she is not in residence, and Phee is so angry over their thwarted plan that he tells Thomas to turn the guard into gold. Thomas refuses, and Phee tells him X-Factor will die for his obstinance.
Suddenly, the bright lights of the approaching police cars surround the trolls. Thomas surmises that sunlight will destroy them, as the trolls were frantic to complete their task before dawn and shy away from the police lights. Regardless of the brightness, Phee flips over a police car before they flee on the magic carpet.
X-Factor hears the gunfire from the police and spots the retreating figures on the flying carpet. Thomas sees the team approaching and cheers. Archangel uses his razor sharp wings to slice the magic carpet in half, leaving Phee hanging from the remnants. Iceman freezes a block of ice around Phough’s foot, pulling him towards the ground with Phy and Thomas. Phee rages that they were so close to victory and how ashamed he is of such a senseless failure. Phy tells Phee not to count them out yet, as he smashes the ice block from Phough’s foot. Beast, flown up by Warren, hops on Phough’s back, but is kicked off by Phee’s massive foot. Cyclops has had enough and disintegrates the last of the magic carpet Phee is clinging to. Phee crashes into the other trolls and Thomas and they plummet to the ground. Jean catches a falling Hank, who is worried about Thomas.
The trolls and Thomas crash down into an underground tunnel, where the trolls are safe from the approaching sunrise. X-Factor drops into the tunnel, but is unable to see the trolls in the darkness. Thomas calls out to them, telling them sunlight will destroy the trolls but Phy quickly muffles him.
X-Factor follows Thomas’ voice and Jean recommends that Scott blow a hole in the tunnel’s roof to let the light in. Cyclops doesn’t know if there are buildings or people above them, so they will have to fight them directly. Iceman forms a wall of ice in the troll’s path, but Phy easily smashes through it. Thomas wonders if he should try turning the trolls to gold, but it would be too hard to turn them back to flesh. As they continue through the tunnel, Phumm and Phay join them. Thomas realizes with horror that they are heading towards his home.
As X-Factor closes in on them, Phay grows into a massive figure and blocks their way. Thomas shouts out to blast a hole in the ceiling, that there is only construction overhead. Cyclops obliges and Phee cringes, awaiting the harsh sunlight. However, being a typical day in London, it is raining and no harm comes to the trolls.
Phy leaves Phay, Phough and Phumm to deal with X-Factor while he and Phee take off with Thomas. Phay shape-shifts into a huge octopus and grabs Cyclops, Iceman and Beast with his tentacles. Archangel battles Phough in the air, while Jean tries to free the others with her telekinesis.
At Thomas’ home, Mrs. Jones sits worrying about her son. Suddenly, the floor explodes and Phy and Phee come in with Thomas. Mrs. Jones is thrilled to see her son, but is shocked when the trolls tell her that Thomas is an alchemist of great power. Thomas admits to her it’s true, that he is a mutant. Phy tells the boy that when X-Factor arrives, he is to tell them he has joined the trolls freely or his mother dies!
X-Factor appears, lifted by Jean through the hole in Mrs. Jones’ floor. Phy yells at Thomas to follow his instructions, as Phee menacingly holds his mother. Thomas battles with his conscience, but realizes the trolls will even hurt innocent people like his mother to get what they want. A flash of light bathes the room and Phy and Phee are turned to gold!
Thomas guiltily looks at the golden figures and promises to become a molecular biochemist, take on the superhero name of Alchemy and will learn how to turn them back into flesh and blood. His mom considers the tuition for all this education Thomas aspires to and wonders if they could sell the golden trolls, but Beast has a better idea.
A while later, Thomas, Mrs. Jones and X-Factor deliver the gold trolls to Hyde Park. Jean comments that they make attractive ornaments, but someone might try to steal them, as they are gold. Thomas concentrates on the chemical composition of lead and turns the trolls in to lead statues. Beast tells Thomas they have a school where young mutants can learn to control their mutant powers. Thomas asks if they teach molecular biochemistry. Beast tells him not yet, so Thomas decides it would be best to go to university. Jean kisses the boy on the cheek and X-factor departs.
As they fly away, Bobby wonders if the other three trolls will go after Thomas. Beast assures him Phy was the brains of the operation and after they see what Tomas did to Phy and Phee, they’ll steer clear of him. Jean notes that most of the mutant kids they’ve found have had no parents or are alienated from them or have powers that make it wise to remove them from their home. She says it was nice to find a boy like Thomas who had an accepting family and a fairly normal power and hopes it will be like that for Nathan Christopher.
