The Champions are assigned to escort an Eastern European head of state, Dubrovnik, on his visit to Britain. During a dive in a Scottish loch, their submarine is sabotaged and Dubrovnik is injured. Richard and Sharron are forced to face down a mutiny within the crew, who want to surface and save their lives; the submarine cannot be allowed to surface if Dubrovnik is to survive the surgery, which Sharron has performed.

After burglars break into Nemesis headquarters to access information on Richard, Craig is assigned to monitor him. Richard, however, allows himself to be abducted, leaving a message for his colleague. He finds himself imprisoned in a luxurious room (the "gilded cage" of the title), where his captor (John Carson) threatens him that, unless Richard can decipher a code, a young woman, Samantha (Jennie Linden), will be killed.