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One giant, Fafner, kills his brother to get all, and transforms himself into a dragon to guard his wealth. The gods enter Valhalla over the rainbow bridge. This ends the first part of the drama, called the Rhine-Gold. The second part, the Valkyrie, relates how Wotan still covets the ring. He cannot take it himself, for he has given his word to the giants. He stands or falls by his word.

Wotan comes and tells Mime that only one who has no fear can remake the sword. Now Siegfried knows no fear and soon remakes the sword Nothung. Wotan and Alberich come to where the dragon Fafner is guarding the ring. They both long for it, but neither can take it. Soon Mime comes bringing Siegfried with the mighty sword. Fafner comes out, but Siegfried slays him.

Wotan comes and tells Mime that only one who has no fear can remake the sword. Now Siegfried knows no fear and soon remakes the sword Nothung. Wotan and Alberich come to where the dragon Fafner is guarding the ring. They both long for it, but neither can take it. Soon Mime comes bringing Siegfried with the mighty sword. Fafner comes out, but Siegfried slays him.

"Is it already the slayer of the dragon?" he wonders; "is it he, already, who shall kill Fafner?" A moonbeam breaking through the clouds reveals the form of the Wanderer advancing toward Neidhöhle. The enemies see and recognise each other.

As Fafner carried away his treasure, a great storm gathered over the mountain crest. The sky grew black. The thunder rolled. Its echoes bounded on from cloud to cloud, from peak to peak, then rumbled down the valleys to the sea. Then the clouds drifted away. The setting sun shot its long rays into the deep valley.

He drags Fafner to the cave's mouth, that his bulk may block it. "Lie there, you too, dark dragon! Guard at once the shining treasure and the treasure-loving enemy; thus have you both found rest!" The sun is high; heated with his exertions, Siegfried returns to his mossy couch under the trees, and is presently again looking overhead for the friendly bird.

He remembers hearing from Mime that one might come to understand the language of the birds. Attractive possibility! Pricked by his desire at once to bring it about, he springs up, cuts one of the reeds growing around the pool where Fafner goes to drink, and fashions it into a pipe. He tries upon it to imitate the bird-note.

The Wanderer knew it well! How, now, shall I hide my endangered head? It is forfeit to the intrepid boy unless Fafner shall teach him fear But, woe's me, poor wretch, how will he slay the dragon, if he learns fear from him? How will he obtain the Ring for me? Accursed dilemma!

Loge, the mischief-lover, whispers to Fasolt, "Let him take the treasure, do you but reserve the ring!" Fafner has during this not been idle, but has sturdily filled his sack; the ring is on his hand. Fasolt demands it in exchange for Freia's glance.

Fasolt, otherwise preoccupied, had not thought to bring a sack. He attempts to stay Fafner's too active hand. "Hold on, you grasping one, leave something for me! An honest division will be best for us both!" Fafner objects, "You, amorous fool, cared more for the maid than the gold. With difficulty I persuaded you to the exchange.