This is a silver forked demon tongue. It's all that's left from a Wailer King demon known as Silvertongue after you defeated him in a tale you like to call:
It all started when Hardcase spoke with you about getting rid of a demon problem for a lady in return for a big payoff. She wanted to get rid of a Wailer King known as Silvertongue who she inadvertently made a deal with. Hardcase had you start interrogating the Wailers to see if you could find Silvertongue's true name - it turned out to be Cacophonix!
The next step was getting a banishing ritual. No one knows more about demons than the Circle of Thorns, so you raided one of their temples to get the materials for the ritual.
Hardcase passed word that the lady who made the deal with Silvertongue was trapped in a warehouse with the demons closing in on her. Since she was the payoff, it was important to get to her in time. Confronting Silvertongue there, you found that the whole mess was set up by the demon! The banishing ritual was useless against him since he passed on a false true name. You managed to defeat Silvertongue anyway, but he promised to return again.