Answer:
What letter comes next: O T T F F S S ?
Often held but never touched. Always wet but never rusts. Often bits but seldom bit. To use it well you must have wit.
Something wholly unreal, yet seems real to I. Think my friend, tell me where does it lie?
What binds two people yet touches only one?
Not born, but from a Mother's body drawn. I hang until half of me is gone. I sleep in a cave until I grow old. Then valued for my hardened gold.
I am owned by Old McDonald.