Right-click on the pendulum and select 'use' to concentrate on the pendulum.
When nothing is found it will say:
"The silver/gold pendulum seems dead."
If it detects water nearby it will say:
"You think you detect some faint tugs in the silver/gold pendulum"
The way it works seems to be similar to prospecting, and therefore to determine the exact location of the water source pretend it's a vein you're trying to locate and use the same methods.
== Notes ==