I called Gobukichi-kun, Gobumi-chan, Gobue-chan, and then both Hobusei-san and Hobusato-san to get properly armed. After that I asked Blacksmith-san to bring me the knife made from spirit stones. I thought having a weapon is much better than being unarmed.
Because the Spirit Stone Knife was flashy in appearance, it seems like it would be useful as a deterrent.