You got this from the Goblin Overlord in the Valmorgen Sewers to use in a quest to convince his fellow Goblins to assault a heavily fortified Ratman Fortress.
Made by Goblin Priests of the residue of a Leprechaun this item increases the luck of the wearer, making it more likely for them to convince opponent Goblin tribes to fight for a common goal, instead of battling each other over power, gold and less sensible reasons.