Smaug wasn't exactly hiding. He was laying in the main chambers in the heart of the mountain. Bilbo just went straight down the tunnel from the "side porch".
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In chapter 5; Riddles in the dark; bilbo finds a ring.
Ah, what a lovely question! "Between the flying rags" in The Hobbit refers to the moment when Bilbo is trying to escape the goblins in the Misty Mountains. It's a whimsical way of describing the chaos and confusion of the scene, where Bilbo is darting between the goblins' legs and cloaks, trying to find his way out. Just imagine the swirling colors and movement in that scene, like a dance of bravery and quick thinking!
Bilbo said, talking to himself, "what have i got in my pocket?" (it was the Ring). Gollum thought it was a riddle and Bilbo decided to make it one. he gave Gollum three chances to guess and gollum lost after four. then gollum went "to get something" (it was the ring), and Bilbo thought he was abandoned and left with the ring on. Gollum thought Bilbo knew the way out and he wanted to follow him, realizing Bilbo had the ring. Bilbo saw Gollum racing towards the gate and followed him to safety.
Mike Lair was born in 1946.
Gandalf surprised Bilbo and he was foreshadowing the future