The correct answer is, the dragon keeps the treasure it steals in the cave or its lair. The dragon dwells in a cave.
The reference is to the story of Beowulf. In the final act, Beowulf fights against a big dragon. Indeed, the dragon is the third creature Beowulf confronts in the story. This is the result of a robbery. A slave steals a jewel, a precious cup from the Dragon’s lair. The Dragon burns the towns and that is when Beowulf decides to face the creature and kill it.