The Arkenstone is one of the most coveted objects of Middle Earth, second only to the Rings of Power, which were designed to allure and entrap their wearers into Sauron’s evil command. The Arkenstone is a precious gem discovered at the heart of the Lonely Mountain during the second age. It held immeasurable beauty that was capable of changing the light in any room to an iridescent glow. The stone became the heirloom of the line of Durin, Thorin’s house.
It was said that any who possessed the gem could call upon the seven armies of the dwarves to ride to battle in their defense. Hints of this are shown in The Hobbit movies, in which the ravens can be seen carrying messages between the dwarven armies because they recognized Thorin’s authority as the rightful king. But when the Battle of the Five Armies broke out, and a whole range of orcs, elves, dwarves and men went to war, what happened to the irreplaceable stone?
It is first important to understand that the Arkenstone made its surprising way into the hands of Bilbo Baggins. Bilbo seems to be a character who often ends up in the possession of objects he never intended to require. The One Ring and the elven blade Sting are two other examples. But when Gandalf thrusts the brave and loyal hobbit into the quest to reclaim the fallen kingdom of Erebor with Thorin and his company of dwarves, Bilbo is hired as their burglar. He is tasked with sneaking into the mountain to retrieve the Arkenstone undetected, from beneath the sleeping dragon’s belly. Incredibly, he does actually manage to achieve the task, but then proceeds to smuggle the Arkenstone out of the dwarven keep. He takes it to the men of Lake Town for them to use it as a bargaining chip for compensation for their homes and lives that were destroyed in the vengeful dragon’s terrible fire.
The battle erupts mid-way through negotiation, with a trap lying in wait for Thorin and his nephews Fili and Kili. The orcs want to wipe out the line of Durin, to whom the Arkenstone belongs. The telling of the story in the Peter Jackson films differs greatly from Tolkien’s original book. The original narrative depicted a short but heroic account of the dwarves struggle to defend their mountain, aided by many friends. The film, meanwhile, became an epic and often over-zealous war of dramatic proportions. But during both, there is no further mention of the Arkenstone in the duration of the battle. It is unknown whether it is passed from the hands of Bard back to the dwarves, whether it falls from someone's pocket and gets lost during the fray, or whether it vanishes completely.
Both the book and the films ultimately end with the death of Thorin and his kin, followed by the succession of Thorin’s cousin Dain, who then becomes king under the mountain. In one of the most spectacular and emotive scenes of the trilogy, Thorin, Fili and Kili are laid out on funeral plinths at the heart of Erebor. Around them, their mourners light thousands of candles attending their funeral. Gandalf gives a eulogy, and heralds Dain as the new king. He also bids farewell to Thorin, as the dwarf who was brave enough and strong enough to reclaim the home that had been guarded by Smaug for decades.
As a mark of respect for Thorin, it was actually decided in later chapters of the book that the Arkenstone should be buried with him. In many senses, Thorin will always be the king under the mountain, the one who sacrificed everything for the love of his people and their home. And thus, the Arkenstone is laid upon his chest, and subsequently returns to the earth, becoming the heart of the mountain once more.
The Arkenstone, like the rings of power, is one of those objects that are too dangerous for any one person, or even any one race to possess. It has terrible effects on those who look upon its beauty, and it drove Thorin, and earlier Thorin’s grandfather Thrain, to dragon-sick madness. Therefore, it is not only a respectful choice to bury the Arkenstone with Thorin and his family in recognition of all that they gave to save the dwarves' homes. Doing so also serves as a way to keep it out of the hands of those who may be corrupted by it. The Arkenstone remains forever out of reach, but stays with the people who protected it, and who used it to create the mighty kingdom in the first place.