_Swoop_

I have experienced this as well, lost a level 5 black ox hammer most recently. It's hard to be 100% sure, but I noticed it shortly after the game had crashed and I logged back in. I use the hammer very regularly and went back looking for it in the last places I had been. Frustrating, fortunately it was only level 5, but then again I don't have any weapons/armor greater than level 5 at this time. This is in a multiplayer world, however I was playing by myself at the time. I have the Holiday 1.1 update.