Any ideas to what caused this to happen?

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[Edit: At first I thought it was gold-capped, but then I looked more closely.] The gold plating is damaged and the case-back is badly polished. The dial is also poor. It's in rough condition overall. You should probably just use your own judgement on pricing it.
 
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Quite common for a gold-filled or gold plated case which has been worn daily for many years.
 
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Gold filled is fixed to the case by heat and pressure. Over time wearing causes wear through the gold fill and stress will then cause certain areas to split.

When I bought watches like that. It was for the dial and movement. Cases toss. If the back was good. I kept them