Yes, you need to go the hollow, head down to Ash lake and make a covenant with the great stone dragon. You get a dragon stone which you need to equip in your inventory then use. Your head turns to that of a dragon. Put the item you want to duplicate in the inventory and .....well, you can youtube the rest. Enjoy, cause once the patch hits, you are outta luck.
TC...just play the game dude. You'll find more than one item of everything. Isn't one of the main points of the game to adventure and find out what's out there? Also, gold is nothing like it was in morrowind or oblivion. You'll find plenty of money in the game early on and can easily create new potions and items at different locations, not to mention people always seem to have work to do.
Why does everyone need to chime in with their "You're not playing the game the way I would play it so STOP ENJOYING YOURSELF AND PLAYING THE GAME YOU WANT TO!!!" tag. If he wants to cheat let him cheat and let it go. I guarantee he knew you didn't approve, and he didn't care, it's not like he's going to go, "Oh some random jerk doesn't like the fact I'm item duplicating, I better not do that" so all you're doing is muttering up the board with your complaints. Answer the question, or close the topic and move on, jeez.