Bilbo, Gandalf, and the dwarves travel onward for many more days. Bilbo is not enjoying the trip, as he did at the beginning. He often finds himself missing his hobbit hole. When he sees a mountain in the distance, he asks whether it is their destination. Balin scoffs and says it is only the first of the Misty Mountains. The little group has to cross the Wilds, climb over or under the Misty Mountains, and then journey through more Wilds beyond that before coming to the Lonely Mountain where Smaug the dragon lives. When Bilbo understands how far they still have to go, he feels worn out and sad.

One day Gandalf says they will soon stop and rest for a while. He has sent a message to Elrond of Rivendell, an elf-friend who will let them stay with him and replenish their stores. This idea cheers Bilbo and the dwarves a great deal, but the journey to Rivendell is longer and slower than they imagined. Tea time passes without notice that afternoon, and the day grows dark as they cross fields and marshes. Finally Gandalf calls out that they have arrived, and Bilbo looks down into the hidden valley of the elves.

As Bilbo rides into the valley, he hears elves singing in the trees. The singers tease the dwarves, who do not generally like elves. They direct the travelers toward the Last Homely House, where Elrond lives. Bilbo and his companions spend two weeks in Elrond’s home, eating, refreshing themselves, and listening to the elves’ wonderful stories. Rivendell is a sort of paradise, and Bilbo feels that he would gladly stay forever, even if it meant never seeing his hobbit hole again.

Elrond tells the dwarves and Gandalf the names of the blades they retrieved from the trolls’ cave. They were made by the High Elves of the West for use in the Goblin Wars. He says it is a mystery how the blades came into the hands of trolls, but he guesses that they have a long history. He supposes that the trolls took them from plunderers who took them from a dragon who took them from their original owners.

Although Elrond disapproves of dwarves’ love for treasure, he agrees to look at their map and offer advice about how to approach the Lonely Mountain. On the map, he notices moon runes, characters magically written so they can only be read in moonlight on the anniversary of the night they were written. These runes instruct the travelers to wait outside the secret entrance of the Lonely Mountain on Durin’s Day, the first day of the Dwarf New Year, which falls on the last day of autumn. If Bilbo and the dwarves are present when the thrush knocks, the setting sun will light the keyhole to the secret entrance. Thorin has the key, so Elrond thinks it is likely that the adventurers will get inside. The next morning, with their bodies and spirits rested, the travelers set out for the next phase of their journey.