An item can be upgraded in the blacksmith's reinforcement section and up to 20 times. The number of times an item has been upgraded is displayed in the area of the corresponding achievement of the blacksmith, as well as in the info display of an item itself.
When being sold or dismantled, upgraded items return a proportionate amount of resources invested in the upgrades. This does not apply to, for example, weapons value that have been thrown in the toilet as they lose their sales value there.
To upgrade the attributes of an item, click on it, drag the item onto the corresponding area at the blacksmith or use the context menu by right-clicking the item you want to upgrade. Items which can be upgraded are highlighted in your inventory. You can also upgrade equipped items.
An attribute upgrade costs metal and arcane splinters.