What was Jim's most prized possession in "The Gift of the Magi" by O. Henry?

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On the face of it, Jim's most precious possession is his gold watch, a valuable heirloom that's been passed down to him through the generations. This is the watch he pawns to buy a new set of combs for Della. She in turn knows just how much the watch means to Jim, which is why she sells some of her hair to pay for a new chain.

Yet both Jim and Della come to realize that the most precious gift they possess is each other. This is what makes them wise. They both made a mistake in pawning or selling something they thought was precious, but through that mistake they've come to understand what really matters in life. Della may have lost some of her beautiful hair, and Jim will somehow have to redeem his pawn ticket to get his watch back, but the most important thing of all is that they still have each other.

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In O. Henry's short story "The Gifts of the Magi," James "Jim" Dillingham Young's most prized possession is the gold watch that belonged to both his father and his grandfather and has been passed down from one generation to the next. This watch is so fantastic that O. Henry claims,

Had King Solomon been the janitor, with all his treasure piled up in the basement, Jim would have pulled out his watch every time he passed, just to see him pluck at his beard from envy.

Unfortunately, the Dillingham Youngs are not a wealthy couple. With Christmas approaching, Jim decides to make a huge sacrifice: he pawns off his watch in order to get money to purchase a lovely set of tortoiseshell combs for his wife, Della, whose beautiful hair is her most prized possession.

When Jim arrives home that night, he discovers Della cut off and sold her hair in order to purchase a chain for his watch. The pair is stunned by the sacrifices they each made that also ultimately render both gifts useless. Despite this, they are incredibly moved by their love for one another, and this willingness to give from the heart with no concern for one's own happiness serves as the lesson of "The Gift of the Magi." 

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