In the Nibelheim flashbacks, he tucks his sword through his belt after each battle. So it doesn't exactly have sheath, bit it does rest somewhere.[qq]However, it seems that the Masamune, being a blade only Sephiroth can weld (as stated several times in the game) must be somewhat magical[/qq]Nah, anyone can pick it up and wave it around, but it's such a long blade that it takes unique strength and skill - like Sephiroth's - to actually use the thing effectively in a fight.