If their skill were great enough by Lyra

Chapter 1

At that very time great craftsmen of Nogrod were lately come into Doriath; and the King therefore summoning them declared his desire, that if their skill were great enough they should remake the Nauglamír, and in it set the Silmaril.
~ The Silmarillion, “Of the Ruin of Doriath”

“A prong setting,” Barzi said, “obviously.”

“Obviously not,” Zigil retorted. “The bezel technique is much better suited to the purpose. The gem will be better protected – the wearer will be better protected, for that matter! And it will be less easily lost.” She could not help but smirk, pearly teeth glinting between the neat black braids of her beard. “If the Dark Lord had used a proper bezel setting in his crown, even one of Telkhar's* knives would have been hard put to cut the gem from it. Prongs split much too easily.”

“Besides, the old masters used bezel settings for the other gems,” Tharka spoke up. “We should maintain the same style.”

Barzi waved that argument away with a leather-gloved hand. “This is an exceptional gem, and will be the centrepiece, so there is nothing wrong in using a different setting. Zigil, you should know that prongs are the perfect choice for diamonds; that way, they can sparkle much brighter!”

Zigil raised a bushy eyebrow. “You forget that we are not speaking of an ordinary diamond. Yes, a diamond needs to catch the light from all around in order to shine bright. This one, though? It shines with its own light.” With a dramatic flourish, she yanked the protective velvet covering from the Silmaril, which duly filled the deep cave with light. The perfect white remained untouched by the flickering yellows of the torches, the red gleam of the embers in the furnace.

Barzi was still not satisfied. “Well, surely we want to maximise that light,” he said, stroking his beard, “so we should still use as little metal as possible.”

“On the contrary,” Zigil protested again. “Since the light comes from the gem itself, the metal behind it will in fact act as a mirror. So once more, a bezel setting would be the perfect choice.”

The forge-master mulled this over, lifting up the Silmaril, holding it this way and that before he unwrapped the Nauglamír. Laying the exceptional gem very carefully in the middle, he grudgingly said, “I suppose you are right. Really, it is a sad waste, though. Two such marvellous pieces could make two priceless treasures. Instead, our forefathers' work must henceforth be outshone by that Elvish jewel, which would be just as precious on its own.”

“It is a shame,” Zigil agreed readily, mollified by Barzi's concession. “Should we refuse, then?”

“And leave this work to some second-rate jeweller?” Tharka's eyes flashed at them like the lesser gems in the Nauglamír. “No; if this work is to be done, it is better done by us. And since it is our task, let us set to it.”

Chapter End Notes

I have taken the liberty of assuming that “Telchar” is simply a Sindarinized form of the master smith of Nogrod's Khuzdûl name. It is not Sindarin, but it does not conform to the linguistic conventions of Khuzdûl, either. Since no meaning for the name is offered (and the Khuzdûl corpus is tiny anyway), there seems no sense in attempting a translation, so I've just adapted it.