Open the Jaguar Door first
The route to the Silver Dagger goes through the Jaguar Door. Each of its three different Key Pieces is cast with the matching mold at the large forge.
For the three pieces, budget 15 Coal and 24 Scrap Metal, in addition to any material spent on other keys. The Jaguar Door guide covers the molds and casting steps.
Search the room beyond
Insert the three different Key Pieces at the Jaguar Door, then search beyond the opened doorway for the Silver Dagger. Look for the item name when picking it up so you can distinguish it from other loot in the area.
The item description refers to cutting through flesh and spirit.