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The magician displays two red silk handkerchiefs, knots them

Freely display two red silk hankys & knot these together at the corners.

Asks a female spectator to place the knotted part inside her dress, making sure it doesn't fall.

Now show a third different color silk and VANISH it! "
You'll make it appear tied between the other silks"

But, when the magician steps behind the spectator, grabs the hanging ends of the silks and pulls them out, a pair of panties appears tied between!