Loki was so pleased with these proofs of the dwarfs’ skill that he declared the son of Ivald to be the most clever of smiths—words which were overheard by Brock, another dwarf, who exclaimed that he was sure his brother Sindri could produce three objects which would surpass those which Loki held, not only in intrinsic value, but also in magical properties. Loki immediately challenged the dwarf to show his skill, wagering his head against Brock’s on the result of the undertaking. […]
Brock was sure of winning the wager and he did not hesitate to present himself before the gods in Asgard, where he gave Odin the ring Draupnir, Frey the boar Gullin-bursti, and Thor the hammer Miölnir, whose power none could resist.
Loki in turn gave the spear Gungnir to Odin, the ship Skidbladnir to Frey, and the golden hair to Thor; but although the latter immediately grew upon Sif’s head and was unanimously declared more beautiful than her own locks had ever been, the gods decreed that Brock had won the wager, on the ground that the hammer Miölnir, in Thor’s hands, would prove invaluable against the frost giants on the last day.
In order to save his head, Loki fled precipitately, but was overtaken by Thor, who brought him back and handed him over to Brock, telling him,† however, that although Loki’s head was rightfully his, he must not touch his neck. Hindered from obtaining full vengeance, the dwarf determined to punish Loki by sewing his lips together, and as his sword would not pierce them, he borrowed his brother’s awl for the purpose. However, Loki, after enduring the gods’ gibes in silence for a little while, managed to cut the string and soon after was as loquacious as ever.
Snorri Sturluson (13th century). ‘Sif, the Golden-haired’. Adapted by Hélène Adeline Guerber (1909). Myths of the Norsemen, pp. 65–68. London: George G. Harrap.
† In the original it is Loki (not Thor) who cautions Brokkr not to touch his neck: “Þá vildi dvergrinn ho̢ggva af Loka ho̢fuð, en Loki sagði at hann átti ho̢fuð en eigi hálsinn.” In the Rasmus B. Anderson translation (1901): “Now the dwarf wanted to cut the head off Loke, but Loke said that the head was his, but not the neck”. However, I think Guerber’s choice is defensible in the context of a retelling, as Loki, having his head on the chopping-block, might not be in the best position to impose terms on Brokkr.