[Nerwen]

I'm sorry, but that's just another example of what I'm talking about, and has already been suggested– in fact as I understand it, the "Silmaril-Arkenstone" theory assumes something of the kind. Again that's what's wrong with it– it rests on a whole series of improbabilities.

Let's just examine the whole case, shall we?

*If the Silmaril got carried hundreds of miles beneath the Earth's crust to Erebor

and

*if it somehow became completely coated with "lesser gems" in the process

and

*if this took place *really quickly*, between the War of Wrath and whenever Erebor became inactive (which can't have been long afterwards and was just as likely earlier)

and

*if the dwarves, despite being master craftsmen, somehow failed to recognise they were dealing with a cut stone, even while they were shaping it themselves...

...you see the problem?