Socketing has to be one of the best loved features of this game. It adds a whole new dimension to your items and allows you to customise your character even more. But it can be a bit confusing when you first start out! But once you know about socketing, you'll never wear an unsocketed item again. I know I don't.

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So What Is Socketing?
Anyone who played Diablo 2 will have an idea what socketing is. Basically you can combine items with your weapons, shields and armour to improve them. This can allow you to totally customise your equipment to be much more suitable with your character build.

What Do I Gain From Socketing?
You can gain many things from socketing in Sacred. Depending on what you socket, you can gain extra defense, protection, damage, life leech, combat arts... the list just goes on. You cannot gain anything that your class cannot already use however. A Battle Mage will never be able to use Vampire Transformation through socketing.

How Do I Socket?
You must find a smith in town. These are the ones with a little hammer above their heads. You also need an item with sockets in. These are displayed as empty coloured squares at the bottom of the item description, and also at the end of the item name as a number (e.g. Rotting Greaves 0/2 - this means 0 of 2 sockets have been socketed). All you need to do then is to put the item into the relevant box that appears when you click on the smith. You'll see a number of circles appear below the item; these correspond to the number of sockets the item has. Simply place the items you wish to socket into these circles. A yellow circle will appear to the right with the price above it. When you are happy with the item, click this yellow symbol to make the item.
In Underworld if you are a Dwarf you can use the Forge Lore to smith items in the field and also get access to special smithing arts, making you very popular with other players ;)

What Can I Socket?
Combat Art Runes - You can socket ANY rune, not just those belonging to your class. If you look at the rune, you will see it usually has either a blue or gold bonus on it as well as the CA. So you can socket certain Vampire runes to gain Life Leech, or certain Battle Mage runes for extra experience. However if you socket one of your class, providing you have at least 1 level in that CA from reading a rune, you will gain a +1 to that art with only 1/3 of the normal regeneration increase.
Rings and Amulets - These can be very nice to socket. Not only will you get either extra protection or damage from them, but you can also get many other bonuses too. For example, Vamp runes have 3% life leech on them, but you can buy/find rings or amulets with e.g. 8% life leech AND 2% critical hit on them.
Smithy Arts - these are seen at the smith; the three circles on the far right of the window. They're good for filling up the odd empty socket, or to boost your resistances. Dwarves in Underworld have access to their own special versions of these via the Forge Lore skill.

What Do Different Coloured Sockets Mean?
You'll notice three different coloured sockets (and with Plus the addition of a fourth rare colour that I've never seen). Basically these correspond to Bronze, Silver, Gold and Green as the super-rare one. These give a bonus to the damage and resistance on socketed rings or amulets.
The estimated bonuses are Bronze - no bonus, Silver - +5-6%, Gold - +10 - 12% and Green - 15%. These were worked out by some people at the official forum so they may not be 100% accurate, but basically the higher colours are better, so put your preferred items in those ;)

How Can I Unsocket Something?
As of Plus, you can only ever get ONE item out of a socketed item. Even if there are 4 things socketed. Also if you have nothing but smithy arts into the sockets, you will not be able to unsocket them ever. So always have at least one thing other than smithy arts in an item. However in Underworld you can always empty your sockets, even if they only have smithy arts in.
It's very easy to unsocket your items. Simply go back to the smith, put the item into the box again and then left click the item you wish to save.