The paper trail leading to the demise of the Dixie Sword is scant at best. Lost in the early months of the World War II, the vessel received no press coverage. It was rumored that the Dixie Sword was torpedoed off Nantucket and sank while attempting to make shallow water. This story probably arose from the fact that news of the sinking was withheld from publication so as not to alarm the general public.
Official reports state the vessel foundered in a storm.
Caught in heavy seas off Nantucket, the freighter began to take on water. In an attempt to make the safety of Nantucket Sound, its Captain steered toward shore but the vessel fouled a buoy in Pollock Rip Channel and sank off Butler Hole, Monomoy. In the 1960s, noted wreck diver and author, Brad Luther wrote of many dives on the wreck. At that time much of the vessel remained above the sand, although most of its compartments had been filled. Today, MetroWest Dive Club member, Pete Reagan, has done numerous drift dives in the area of the wreck and reports that the vessel is completely sanded over.