IMHO, this is a very unique specimen. A well reapected Author/Collector, from who, I believe is a member of this forum, the following quotes were received from back in 1997:

"I was very interested to see the photos and slides. I can't say much about them other than that I haven't seen similar ones and the look to be of very good quality."

"I wonder if the pilot/observer badge with brilliants might be some sort of prototype? I know for a fact that the Bavarian Army Museum in Ingolstadt has a set of Oakleaves, Swords and Diamonds for the Knight's Cross which are supposedly the first prototype priduced and which are cast from standard dies with jems set in drilled holes, in the same manner as the sapphires are set in your badge. Perhaps your badge is, therefore, an early variant, before the badge was entirely hand made and covered in diamonds?"

"There is another alternative as well. You know how the Navy produced silver war badges with diamonds only on the swastika (e.g. Ausillary Cruiser, High Seas Fleet, E-Boat etc. for presentation to Naval personnel in these branches of the Navy who won the knight's Cross with Oakleaves? These diamond studded war badges are well documented as is the criteria for their award. It strikes me that the badge in your possession is very similar indeed in manufacture to these other diamond studded warbadges. Perhaps this is a prototype of a badge which was intended for presentation to all pilots who won the Knight's Cross with Oakleaves?? Actually, on reflection, I think that that is a more plausible explanation that it being an early version of the standard pilot/observer with diamonds."

"All this is just guesswork, however."

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