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A coin formerly given by a British Sovereign (as late as Queen Anne, 1702-14) to a sick person whom he touched to heal him of scorfula (the 'King's evil') and sometimes suspended personally by the sovereign around the recipient's neck. It was regarded as an amulet, the magic power of which was supposed to be derived from the power of the King's touch to cure the ailment, hence its name.
From: An Illustrated Dictionary of Jewelry, autor: Harold Newman, publishers: Thames and Hudson