The name Sméagol name derives from Old English, and in that language the vowel combination éa was a diphthong, pronounced approximately like 'ai' or 'ay' in modern English. So, strictly speaking, the name should be pronounced as if it were spelt 'Smaigol' or 'Smaygol', but the alternative pronunciation as 'Smeegol' is rather more natural to speakers of modern English, and is also very common.
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