Dreamed I dug, taking in silver (8)
I believe the answer is:
imagined
'dreamed' is the definition.
(I've seen this before)
'i dug taking in silver' is the wordplay.
'dug' becomes 'mined' (dug into the ground).
'taking in' indicates putting letters inside.
'silver' becomes 'Ag' (Ag is the chemical symbol for silver).
'mined' going around 'ag' is 'magined'.
'i'+'magined'='IMAGINED'
(Other definitions for imagined that I've seen before include "Dreamed" , "Created in the mind" , "Envisaged" , "Created mentally" , "Dreamt up" .)