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What this sounds like to me is an "intimate" back and fourth between cousins. You mentioned that your son's cousin was accused by your son of stealing $20 from him. I am curious whether or not this has been proven to be true, at least among the cousins. Maybe your son's cousin admitted to him that he took $20, and so your son felt obligated to take his watch as a replacement; I am not saying that this is justified, only trying to get insight on why he might have done it. I think that your best option is to have a sit and talk with both of the cousins when they are together, and seemingly in good spirits. Tell them exactly what you are aware of, and allow them to give you their side of the story. If there was no agreement, including an understanding from the parents of your sons cousin, that he should have the watch, I recommend retrieving the watch from your son, and returning it to his cousin's parents. Make sure that the parents of your son's cousin knows about the claim of the $20, and the watch as well; as they are very likely the ones who purchased the watch. By getting the story from all sides, you are better able to know what to do next in terms of discipline for your son. Do express to your son that you do not like that he has lied to you, and that he will have to earn your trust back. A possible good punishment would be to take away some gadget or privilege that he enjoys, and allow him to earn it back through his honesty and good behavior (which it sounds like is not much of a problem). If the issue was that his cousin took $20 from him, let your son know that you can't fight fire with fire; his best option in the future in a situation such as this is to bring the issue to an adult such as yourself, or his aunt or uncle, who can better solve the problem. If you have any other questions, or feel that I have not been helpful in answering your question, please message for "earthsister." Thank you.
Thanks for the response. It made me feel better.
I guess I'm just really hurt at the fact that he lied to me...and did it very convincingly.
I can definitely understand. Children will lie when they know they are wrong and are afraid of being punished. Be honest with him about what you know about the issue in order to encourage his honesty in return. It sounds like overall you have a great kid!