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Supposedly you can get one in the docks areas from one of the Bloodsailors.
I actually just got one from a chest in the docks area. I was having the same trouble as you though, when I played through the game for the first time. I found everything but a diamond then. Once I was in chapter 3 I had four of the damned things and didn't want to replace the weapon I had. Keep your chin up. There are better weapons in Chapter 2.
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