You can visit the blacksmith in Rakugai anytime after chapter 3 starts. When you get close to the building, Ryoma sees the blacksmith. The blacksmith tells him if a sword isn't regularly treated, it will go bad no matter how good the quality of the sword, and that he can't expect to get into the Shinsengumi with a bad sword! Ryoma asks how he knew about that and the man says samurai who walk down this way go to one of 2 places - Gion to the east, or the Shinsengumi to the west - and he says Ryoma doesn't look like the kind of guy who would go to Gion. The blacksmith invites Ryoma inside.
When inside, speak to the head blacksmith (in white) and he'll tell you about the blacksmith.
You can create new weapons with the right materials. You can temper your weapons/armour here to make them better. You can also increase the "Status" of weapons/armour (successfully doing so increases the maximum power/defence for weapons/armour when tempering). You can also synthesise 2 weapons/armour together.
As you continue creating/enhancing weapons/armour the "Blacksmith Skill" gauge goes up. When you level up the blacksmith, you can create more weapons/armour and it's easier to be more successful when tempering or increasing status. In the case of tempering, the ring rotation slows down and so it's easier to land on the gold. The maximum blacksmith level is 20.
When the blacksmith reaches level 3, more materials appear in the materials shop.
When the blacksmith reaches level 5, more materials appear in the materials shop.
When the blacksmith reaches level 16, the number of gold icons on the tempering mini-game increases.
When you talk to the guy in the corner to the left when you enter the blacksmith (after talking to the head blacksmith), he gives you a bunch of equipment materials. You can now buy materials from him (see materials shop on shops page).
Note that you cannot create enchanted weapons at this blacksmith. To create enchanted weapons, you need to speak to the Enchanted Weapons Man by the river (next to the save point) in Mukurogai.
Creating New Weapons/Armour
Speak to the blacksmith and select the top option, then the top option again to create a new weapon/armour. You can press L1/R1 to switch between the weapon/armour types. Then you have a list of weapons/armour you currently. Select one of your weapons and then you have a list of weapons you can create when using that weapon as a base, including the materials you need for that weapon (and how much money you need).
Speak to the blacksmith and select the top option, then the second option to enhance your equipment. You can press L1/R1 to switch between the weapon/armour types.
After selecting a weapon, you can choose to temper it (first option), increase the status (second option) or synthesise (third option). There is a list of materials you need on the right hand side when selecting to temper. To increase status, you only need a hammer.
When tempering, you need to press Circle (or X on European consoles) to stop the rotation of these circles on the screen above. When you stop on a bronze one, it gives the weapon/armour a +1 boost, if you stop on a silver one, it gives the weapon a +3 boost, if you stop on a gold one, it gives the weapon a +5 boost.
For status increasing, you only need a hammer. Which hammer you need depends on the status grade:
|Sharp Sword||Iron Hammer||500 Mon|
|Good Sharp Sword||Copper Hammer||1000 Mon|
|Great Sharp Sword||Silver Hammer||2000 Mon|
|Supreme Sharp Sword||Golden Hammer||5000 Mon|
(even though they call them "sharp swords", the grades apply to all equipment, not just swords)
When increasing status, you need to press Circle (or X on European consoles) to stop the line in the yellow area on the screen above. Succeeding increases the status of the sword, failing means it doesn't go up in status and you also lose the hammer and money you used to attempt it.
To synthesise, your base weapon/armour needs to have an "empty" symbol. See the picture below:
You can only use weapons/armour with that icon as a base for synthesis. This is because the weapon's symbol is "empty" and synthesising it with a weapon which does have a symbol (such as one which gives you extra endurance - reducing damage from enemy attacks) gives that enhancement to the base weapon with the "empty" symbol. Note that the weapon/armour you use to synthesise with the base weapon/armour is removed after the synthesis. You get an empty symbol when you raise the grade of the weapon/armour to "Good Sharp Sword" and another when you get to "Great Sharp Sword", allowing you to have more than one enhancement on a single weapon/armour.
To synthesise, keep pressing Circle (or X on European consoles) to stop the object when it gets to the centre.
Speak to the blacksmith and select the top option, then the third option to create a special bullets. Select a bullet type and the amount of bullets you want to create (10, 20 or 30) and it tells you on the right what materials you need. You don't have to do any mini-game for this one; just accept and they are created. You can only make Flaming Bullets at first, but you can make more after purchasing the ability to make more bullets in the Pistol sphere grid.