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He wanted it because it was a ring of power, and if you slipped that ring on your finger, you were invisible; only in the full sunlight could you be seen, and then only by your shadow, and that would be shaky and faint.
Knowing the truth about the vanishing did not lessen their opinion of Bilbo at all; for they saw that he had some wits, as well as luck and a magic ring—and all three are very useful possessions.
Bilbo heard this—the dwarves were on the rocks just above the enclosure where he was sitting—and “Good Gracious!” he thought, “so that is what they are beginning to think, is it? It is always poor me that has to get them out of their difficulties, at least since the wizard left. Whatever am I going to do? I might have known that something dreadful would happen to me in the end. I don’t think I could bear to see the unhappy valley of Dale again, and as for that steaming gate! ! !”
With that he put on Bilbo a small coat of mail, wrought for some young elf-prince long ago. It was of silver-steel, which the elves call mithril, and with it went a belt of pearls and crystals.
Bilbo, of course, disapproved of the whole turn of affairs.
So began a battle that none had expected; and it was called the Battle of Five Armies, and it was very terrible. Upon one side were the Goblins and the Wild Wolves, and upon the other were Elves and Men and Dwarves.
If more of us valued food and cheer and song above hoarded gold, it would be a merrier world.
In short Bilbo was “Presumed Dead”, and not everybody that said so was sorry to find the presumption wrong.

