He is. But Gandolf refuses to give up on his soul. Man those books are spiritual gold. "The most inquisitive and curious-minded of that family was called Sméagol. He was interested in roots and beginnings; he dived into deep pools; he burrowed under trees and growing plants; he tunnelled into green mounds; and he ceased to look up at the hill-tops, or the leaves on the trees, or the flowers opening in the air: his head and his eyes were downward."