This week, a team of diggers began drilling into hillsides near the small town of Deutschneudorf, 200 kilometers (124 miles) south of the capital Berlin, near the Czech border.

The group is headed by Heinz-Peter Haustein, the local mayor, who suspects that crates of gold and silver are stored in an underground cavern.

Haustein said the search could reveal parts of the fabled Amber Room -- carved panels of golden resin backed with gold leaf and mirrors -- which the Nazis snatched from Russia in 1941.

But rather than striking gold, the diggers hit a vein of water that shot out of one of the 10-meter-deep (33-feet) cavities.

Still, the mayor is optimistic.

"Don't worry, we'll find something," he told DPA news agency, adding that the excavation work could take three or four days.

Should the drilling reveal a hidden chamber, the team plans to snake a camera down the tunnel to help search for the loot.

Information from Luftwaffe operator

Haustein said he received a tip-off about the site from a northern German man, who said he had family connections to someone who knew where the Nazis hid their treasures.

Last week, Christian Hanisch said he used coordinates he had found in the possessions of his deceased father, who was a former Luftwaffe radio operator, to locate the cache below the ground.

Hanisch said that initial tests showed that the area contained a large quantity of metal.

"I am sure that there is gold or silver down there," he said.

The site is one of around 100 different locations where parts of the Amber Room have been suspected over the past decades.

Frederick I of Prussia commissioned the original Amber Room as a gift to Russian Tsar Peter the Great in 1716.

It adorned Catherine Palace near St. Petersburg until the Nazis seized it two years into World War II. It was disassembled and transported in crates to a castle near what is now the Russian city of Kaliningrad. It has been missing ever since.

Russia saw the inauguration of a reconstructed Amber Room in Catherine Palace in 2003.