First, you need to have access to the Forest Castle before you can visit the blacksmith that offers the fourth tier of upgrades.
Once inside the Forest Castle, your goal is to make your way to the Royal Chamber. In this room there's a save and teleport location, which will come in handy when you want to revisit.
Exit out of the Royal Chamber from the right side to enter the area with the broken bridge. Your goal is to hop down into the gap in the bridge and jump left to the platform underneath. From here, you can pull a block out from the wall to your left where you should hear a blacksmith pounding away on an anvil.
On the other side of the block is the blacksmith you're looking for. By trading in a chunk of currency and some materials, you can perform the last major upgrade for your weapons.
That's all, Teleport back to Royal Chamber and come see him again if you needed.