Fast travel to Hobbiton and choose "Bofur" as your character. Follow the river east until you come across a box full of bread on the right. Destroy the box and collect the wood and bread, then go straight through the fence to reach a small cave that contains random loot that can be mined. The random loot can be copper, iron, gold, silver, sapphire, ruby, emerald, diamond, or stone. After collecting the loot in the small cave, turn left to see a box of fish near the bridge. Destroy the box of fish and collect the items, then pause the game and select "View Map". Fast travel to Hobbiton again. All loot will respawn. Repeat this process to acquire enough loot to forge every tool and weapon in the game.
Note: The more stud multipliers you have, the better. Go to Bree and collect the two purple studs (worth 10,000 each at x1 multiplier) in the center square of town. Once done, enter the nearby interior shop and then go back outside to make the purple studs respawn. Repeat this process as many times as possible. You will earn 38,400,000 studs for each purple stud collected if you have all five stud multipliers.