Each day of the six-day cycle, a different special event/person occurs in the game. This one happens on the day that TAer cosmosologyx best describes as the Quake symbol, or the one that looks like a cross with the two sides curved up.
The merchant can be found in The Village just south of the tavern, in front of the building with the haystack, during the morning/day. He's wearing relatively fancy clothes, and walking up and talking to him unlocks the achievement.