Here they made their way to the cave of Alberic, whose brother, Mime, they found crouching beside his blacksmith's forge, smarting from recent blows. For by this time Alberic had shaped from the Rhine Gold a magic Ring of marvellous power, and by means of it had made himself the ruler of Nibelheim, forcing the unhappy gnomes to slave day and night, amassing treasure-hoards for him. He had also compelled his brother, Mime, the most skillful smith in that land of forges, to make him a Tarnhelm, or wishing cap, by means of which he could render himself invisible, or take on the form of any creature he chose.

Having learnt this from Mime, who was even now smarting from the blows of his tyrant-brother, the two gods laid their plans; and when Alberic presently appeared, they greeted him in friendly tones, and invited him to show them the wonderful powers of his Tarnhelm.

The gnome, proud of his new treasure, at once put on his wishing-cap, and changed himself into a dragon; and then, at the request of the cunning Loki, he unsuspectingly took on the form of a toad. However, no sooner did the toad appear, than the gods instantly seized it, and binding their captive securely, they triumphantly bore him off to Wotan's mountain-side.

Here Alberic, though he had quickly regained his own shape, found himself a prisoner indeed, his precious Tarnhelm having been put out of his reach; and the exultant gods refused to set him free until he had agreed to yield up all his mighty treasures. So the wretched dwarf, in order to gain his freedom, was compelled to call upon his gnome-subjects to bring forth the precious hoards they had laid up for him, and to pile them in a heap upon the mountain-side.

When the Tarnhelm had been added to the glittering heap of gold and gems, Alberic entreated to be allowed to retain the magic Ring, and upon the request being refused, he passionately laid a curse upon the circlet, declaring that it should bring disaster and death upon every person who should afterwards own it. But in spite of the curse, the Ring was snatched from his finger by Wotan, and then, on being set free, the hapless gnome, robbed of his power, fled back to his own land, vanishing through a cleft in the rock.

A concourse of gods and goddesses had now arrived upon the scene; and presently the giants, Fasolt and Fafner, also arrived to claim their wages, bringing their hostage with them. At first Wotan also endeavoured to retain the Ring for himself; but the gods refused to yield Freia until they possessed this wonderful talisman as well as the other treasures. Then Erda, the wise goddess of Earth, rose slowly from the ground, and warned the great god that disaster was in store for him the longer he held the now fatal talisman; and at last, overcome by this warning, Wotan tore the Ring from his finger, and flung it upon the treasure-heap.

The giants now took possession of their prize; and upon Freia being set at liberty, all the gods at once regained their pristine youth and strength.

But Alberic's curse had not been a vain one, and no sooner did the giants obtain their treasure than they began to quarrel as to which should have the Ring; and in the fight that quickly ensued, Fasolt was killed. Fafner, the survivor, then secured the mighty hoard, together with the Ring and Tarnhelm, and retired to a certain gloomy cave in a wild, deserted spot; and here, in the form of a huge, fiery dragon, he guarded the prize he had won.

Wotan, over-awed at this immediate proof of the terrible power of Alberic's curse, began to wonder how he could preserve himself and all the gods descended from him; for he, also, had owned the fatal Ring for a time, and, god though he was, his powers were limited. Even when Fricka reminded him that the dazzling abode, Valhalla, was still left to him as a Castle of Refuge, he was little comforted, knowing that it had been obtained at a shameful price that would at length bring about the destruction of the gods, since he, their All-Father, could not escape the curse laid upon him; but he agreed to take possession of the castle.

Since the glittering mansion was separated from them by the great yawning valley of the Rhine, Donner, the god of Thunder, came forward to their aid; and first clearing the cloud-laden, misty air by means of a thunderstorm, he set up a dazzling rainbow-bridge from one mountain top to the other.