The Sailing Medallion was a necklace which served as the lucky charm of Captain Dread. He called it his 'Eye that has seen the World'.
Dread made the medallion from the eyeball of his lost navigator friend. It was all he found of him after he had escaped the Cannibals of Monkey Island. Unfortunately he lost it and refused to sail again until it was found or he recieved a suitable replacement.
- Though the story Dread tells is obviously referring to the Head of the Navigator, the head seen in SoMI has two eyes. It is possible that Dread was mistaken in believing the eye he found belonged to his shipmate.