Bilbo and his friends wait fearfully inside the mountain for a long, dark while; it feels like they have been there for days. Finally Thorin suggests trying to open the gate even if the dragon is on the other side. The dwarves try, but that entire part of the mountain has been crushed; no one will ever enter or exit by that way again. Everyone falls into despair except Bilbo, who points out that he has been down the tunnel to the dragon’s lair twice without getting caught. He suggests going again—this time all together.

The dwarves agree, and they all walk as quietly as possible down the passageway. When they reach the treasure, Smaug is not there. The dwarves send Bilbo out to investigate, but he finds no dragon and no information about where the dragon might have gone. As he climbs the mountain of treasure, he finds the Arkenstone, the heart of the mountain. It is an enormous jewel that was the pride of the dwarves when Thorin’s grandfather was King under the Mountain. Bilbo is stunned by the stone’s beauty, and he puts it in his pocket. Thorin promised him one fourteenth of the treasure and said he could choose his part first. He decides that the Arkenstone is the part he wants. He is not sure if the dwarves will let him have it, but he keeps it close for the time being.

When they are sure Smaug is not at home, the dwarves come out of the tunnel to investigate the treasure. They are astounded by the magnificent pile of gold and jewels, and they quickly pocket some bits and pieces. They take swords and armor as well, and Thorin gives Bilbo a coat of mithril, a special armor made by elves. A celebration begins, but Bilbo stops it, pointing out that they are in grave danger. Thorin immediately recognizes that the hobbit is right, and he quickly leads everyone to the front entrance.

Outside, the travelers stop and discuss what to do next. They see no sign of Smaug, but they know he could be hiding and waiting to ambush them. Balin suggests climbing to a lookout tower so they will be able to see their surroundings without being seen. Everyone agrees that this is a good idea. When they arrive at their destination, Smaug is still missing. Bilbo and some of the dwarves collapse to the ground, greatly in need of rest. The rest sit by the door and look around. They see a large gathering of birds to the south, but nobody has any idea what it could mean.