Amulets are charms that are usually hung on one's neck.
Background[]
They can contain special stones, herbs, or inscriptions and are most often used to protect the wearer against things such as sickness, bad luck, or witchcraft. This was obviously the purpose of the amulet given to King Graham by the gypsy. It protected him from "bad magic", as Madame Mushka called it. This is why he came to no harm when he encountered the nasty witch who lived in the Dark Forest of Serenia. It stops all but the most powerful magic[1][2], and thus it was of no use in protecting him from Mordack's much more powerful magic.

The amulet that Graham found on the enchanted isle protected its wearer from being irrevocably lost. Its properties appear quite similar to the Ruby Slippers, with which one clicks their heels together and says "There is no place like home!"[3] The amulet was made of bronze that had tarnished with age. A Tiger's Eye stone was imbedded into the front, the word 'HOME' was engraved on the back.[4]
One magical amulet has a deciphering ability, the magic capable of translating ancient runes.[5]
A fire amulet gives of an illusion of fire.[6]
Behind the scenes[]
The "home" amulet is based on the Wizard of Oz.[7][8]
The reason why "home" takes Graham and Valanice back to Kolyma rather than Daventry, is because Kolyma was Valanice's original home land. Perhaps its somewhat peculiar that the amulet brought Valanice to western Kolyma when her parents castle is in the east beyond the Forest Mountain. Or even possibly brought to the monastery. Was she cloistered there perhaps taught by the monks?
The amulet in KQ5 is known as the 'magic amulet' in the KQ5 Hintbook.
Notes[]
KQ2:
KQ5: The amulet glows with a power of its own.