From NPR:

If you're old enough to remember the movie The Blob, starring a gelatinous, oozing menace that gooped its way across floors, slid under doors, attached itself to an exposed foot, hand, arm and then devoured its screaming victim without making even a swallowing sound ... If you liked The Blob, then feast your eyes on this: Joey Shanks' Killer Silly Putty ... It's real — and it eats magnets! (You don't have to watch the whole thing to get the idea ...)

Well, let's say it "swallows" magnets. What you have here is, in fact, Silly Putty, but doctored with a healthy sprinkling of mixed iron oxide powder. Iron, as you know, likes magnets. Iron and magnets attract. So when Joey Shanks who runs a production company in Chapel Hill was making this for Scott Lawson's YouTube Science and Engineering Channel he put a boron neodymium magnet next to the iron-rich Silly Putty. The magnet and the iron bits couldn't resist each other, and because Silly Putty is a fluid, it pretty much flows over the magnet and appears to "swallow it."

In real life, it does this rather slowly, taking a half hour, sometimes more, but Joey sped up the footage to create the illusion of a gelatinous monster devouring a hunk of metal (or in one poignant scene, an innocent happy-faced metal-boy).

What happens to the metal once it's inside the putty? Does it dissolve in a stew of putty digestive juices? No. Magnet lovers rest easy — it's in there, whole, like Jonah inside the whale.

Does it sink to the bottom? Or stay near an edge, "hoping" to escape? Turns out, according to blogger Phil Plait, astronomer, lecturer, writing for Slate, ("It's Alive! ALIIIVVVEEE") the magnet keeps moving, deeper and deeper into belly of the puttyish mass until it reaches equilibrium, until there's roughly the same amount of iron top, bottom, left and right, holding it in place:

The process continued until the magnet was in the center, because it's only then that the forces are balanced. Newton's Second Law of Motion states that an unbalanced force on a mass will cause it to accelerate (though in this case that acceleration is itself balanced by the viscosity of the Silly Putty, leaving very slow but constant motion; it's like terminal velocity). As long as there's more iron on one side of the magnet than the other, it'll move. So eventually it reached the center of mass of the putty wad and stopped.
Which is wonderful, because now you can imagine yourself, being pretty much iron-free, grabbing onto the putty, ripping it open, reaching in, and heroically rescuing the magnet from its horrible fate ... like the hunter who rescues Little Red Riding Hood and her Grandma by slicing open the Big Bad Wolf! This is a physics lesson where you get to be a superhero. Is there anything better?

Well, dark chocolate is better. But that's another post.

http://www.npr.org/blogs/krulwich/2013/04/23/178615004/oh-the-horror-famished-silly-putty-devours-innocent-magnets