The palantíri or Seeing-stones were created in Aman in ancient times. We do not know how many originally existed, but during the later years of Númenor when its people had become divided, the Eldar of Eressëa gave seven of these Stones to Amandil, the leader of the Faithful party of the Númenóreans. These passed in turn to Amandil's son Elendil, and on Elendil's ships they survived the Downfall of Númenor and were brought to Middle-earth.
In Middle-earth the Seven Stones were divided; three for the North-kingdom of Arnor, and four for the South-kingdom of Gondor. All seven survived through the first half of the Third Age; but the first of them to be lost was destroyed in III 1437, when the Stone of Osgiliath was lost in Anduin during the rebellion of Castamir. Further disasters claimed others of the Stones, until by the time of the War of the Ring only three remained active: those held by Sauron, Saruman and Denethor.
A fourth still existed in Middle-earth, in the Tower Hills of the north, but it was set to look back over the Great Sea toward Aman, and could not be used for other purposes. That Stone was collected by Gandalf after the War and returned into the West. By the dawn of the Fourth Age, only two of the Seven Stones were known to remain in Middle-earth: the Anor-stone and the Orthanc-stone. There is also a very slight possibility that Sauron's Ithil-stone survived the Downfall of Barad-dûr, but this seems extremely unlikely.
For more on the nature, history and geography of the Seven Stones, see the entries for palantíri and Seeing-stones.
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