Summary: I couldn't believe that the BoFA didn't touch on the ultimate fate of Erebor's treasure, particularly the Arkenstone and the necklace that Thranduil desired. Perhaps one day the Extended Version will shed some light on these things, but for now, here's my own attempt to do so. Combination of book and movie verse, focuses mainly on Bilbo and Thranduil. Enjoy!
Disclaimer: I have no claim to either the Hobbit books or movies and make no profit from them. Wouldn't even dream of it.
Magnificent
Having bid a very fond farewell to his Dwarvish companions before the gate of Erebor, Bilbo Baggins now rode westward beside Gandalf in the company of Thranduil's folk. It was a weary, lessened Elven host that marched slowly back to their home in the Greenwood, and Bilbo would have wept for that fact alone. These were good, kind-hearted people who should have enjoyed countless more years of vibrant life beneath the trees they loved.
The Elf King's son, Legolas, was not a part of their procession, although Gandalf had assured his burglar that the prince was quite unharmed – at least, physically. There had been emotional blows dealt to all in the past few days which would indeed be slow in healing. Even Bilbo himself knew he would carry such wounds in his heart until the very end of his days.
They traveled for several days beneath an overcast sky, and Bilbo rejoiced that at least some of the Elves maintained high enough spirits to sing when the company stopped to make camp at night. He was likewise glad for the company of Beorn, who had also joined them on their journey. But when at last they reached the edge of the great forest, Gandalf announced that it was time for himself, Bilbo, and Beorn to follow a different path northward, which would bypass the perils of Mirkwood entirely.
"I regret that we must part so soon, Mithrandir," Thranduil chastised gravely. "I would have had you remain for a time as honored guests within my kingdom."
"A kind offer, my friend…but I fear some of us are more anxious for home now than for even the finest of Elven hospitality."
Both speakers glanced down at Bilbo as the Wizard finished speaking, and once again, the Hobbit felt nothing short of sheepish beneath the Elf King's piercing regard. Yet he made no contradiction.
"In that case, I wish you safe journeys upon the road and a warm welcome upon your return."
But just as the King turned his horse's head to go, Bilbo suddenly found his voice. After all, he had been waiting for exactly the right moment for this.
"Excuse me!" he interjected as loudly as he dared. "My lord?"
Thranduil halted, his fair face curious and expectant as he turned back to face the Halfling. "Yes? Have you yet another surprise for us, Master Baggins?"
Even Gandalf's bushy brows were drawn together in confusion, for he'd not the slightest idea what his burglar was about to do.
"I, uh…" Bilbo started fidgeting again, all the while cursing his typical lack of eloquence. "Well, it's just that I did eat quite a bit of your fine food whilst snooping around your home, and I can't help feeling a bit badly about that. Even we burglars do have consciences, you know."
Here he paused, before the barest hint of an amused smile from Thranduil encouraged him to continue. "And so, umm, to atone for that, along with all the other trouble I must have caused you, I would like to offer you a gift."
Bilbo now reached down to clumsily rummage through his saddlebags until he finally found the package he sought. "I didn't take much from the treasure horde – for one thing, how would I ever have gotten it all home? But the Arkenstone is where it belongs now, buried with Thorin under the Mountain; and I do believe this will find a welcome home with you, good King. I only hope it is enough."
Thranduil accepted the small parcel from Bilbo's hands without a word. But words failed him altogether as the King at last looked down upon the necklace of star-like white gems which, for a time, he had held in higher regard than the lives of his own kindred. For the space of a few slow heartbeats, bittersweet memories of the past overwhelmed the present, and not another soul existed around him.
Fierce blue eyes softened behind a sheen of unshed tears, and Bilbo wished Thorin could have seen it. For surely even his stubborn Dwarvish heart would have been touched by such a sight. Thranduil handled the jewels with extreme reverence, raising the dazzling necklace up into the light with both hands. Only those standing very close to him could see how those same hands trembled ever so slightly.
"Indeed, you are full of the most wondrous surprises – Bilbo the Magnificent." Though the Elf's eyes had cleared and refocused, his voice rang with gentle praise. "Truly, you have my sincerest gratitude. I name you Elf-friend, and would have you know that you will always be welcome within my halls. Such blessings would I shower upon you that you would have not the slightest cause for thievery."
Bilbo could only bow in response, his throat constricting suddenly around the realization of how very unlikely it was that he should ever set foot in these lands or see any of these fair folk again.
An easy smile graced Thranduil's features as he then exchanged farewells with Gandalf, and soon the entire Elven host had disappeared from sight beneath the shadow of the trees.
Author's End Note: I really, really wanted to hear Thranduil call Bilbo "the Magnificent" like he does in the book. Movie didn't have nearly enough closure with all the different characters and story lines, in my humble opinion. Thanks for reading!