Location: Reed Flute Cave, China
In the Misty Mountains, Bilbo finds himself alone in a deep, dark cavern where he first comes into possession of the Ring of Power and then meets the creature twisted by its magic Gollum paddling a boat through a rock pool. In the underground gloom, Gollum plays a game of riddles with Bilbo that the latter tricks his way through. He flees the clutches of the despairing Gollum, who realizes too late his "precious" is being taken away from him.
The Reed Flute Cave in southern China boasts one of the world's most spectacular subterranean lakes, ringed by stalagmites and stalactites. The production crew of The Hobbit would have to rig up the location to make it more suitably oppressive and dank, but they wouldn't be the first to alter the space. Chinese tourism officials like to bathe the cave in artificial multicolored light.