Terraria – I can’t craft a Silver Watch? Terarria

You just got unlucky crafting it. "Damaged" is a random modifier (which decreases damage) assigned to items when they're crafted or drop from monsters. Similar negative modifiers, such as "Broken" and "Shoddy," also exist.

Apart from making a new one, there's not a whole lot you can do about it at this point in the game.

However, later on (after you've defeated your first Goblin Army), you can find and rescue the Goblin Tinkerer, who allows you to reforge weapons, tools and accessories, for a price. By then, you'll likely have a different, way better pickaxe, though.

You can use copper to make watches and depth meters. Those stay relevant...until you make a GPS.

I'd say keep 25 bars on-hand, just in case (ease of mind etc etc etc), and sell the rest.