

Ken is infuriated until the veterinarian informs him that Thunderhead has a bowed tendon and can never race again. Despite the strong competition, Thunderhead pulls ahead during the race and is about to win when he suddenly jumps off the track, throwing Ken. When Thunderhead is three years old, Ken and Nell convince Rob to put up the entrance fee for Ken to race him in the Multnomah County Fair, which offers a five-thousand dollar prize. Although he is still unpredictable, Goblin impresses Sargent with his speed, and Nell renames the lovely white horse Thunderhead, after the clouds in the sky. Time passes as Ken saddle-breaks Goblin and trains him as a racer. The Albino eludes them, although Ken manages to recapture Goblin. Ken runs to tell Rob, who realizes that the Albino has been stealing the mares, and they go to find him. One afternoon, Ken is searching for Goblin, who has run off, when he sees the legendary Albino challenging Banner, the McLaughlins' stallion. The blood of Goblin's wild grandfather proves to be dominant, and Ken is hard-pressed to tame the colt, but Rob and Nell encourage him, even though they have their own worries because some of their mares have disappeared. In the spring, Goblin and Flicka come home to the Goose Bar Ranch, and there Ken begins to train Goblin. As the summer passes, Goblin proves to be a fierce, independent creature, but Ken is still sad to return him to the winter pasture with Flicka. Sargent laughingly tells Ken that he does not have to pay a stud fee and can register Goblin, who Ken hopes will become a great racer.

Also present is their neighbor, racehorse breeder Charley Sargent, who is amused to learn that Ken snuck Flicka into his pasture to mate her with his prize stallion, Appalachian.

Ken and ranch hand Gus coax Flicka and the colt into the family's barn, and the next morning, Ken introduces the foal, which Gus's daughter Hildy dubs Goblin, to his father Rob and mother Nell. Ken is delighted to find Flicka but annoyed to see that her new colt is pure white, which means that he takes after Flicka's sire, the wild albino. One spring, teenager Ken McLaughlin wanders the winter range of his Wyoming ranch in search of his beloved horse Flicka.
