Thanks coyotebc and Private Klink.
I've done a little testing in regards to compasses and steel.
Using a regular orienteering compass I've found that large iron based metal loads adjacent to the compass can completely skew the north point - as far as 180 degrees. I used my refrigerator as the metal load about halfway up. If you place the compass above the the metal load it still points north but with a varying degree of error (up to 15 degrees in my case). It may be that there was an electromagnetic field generated by the compressor or such skewing my results. If anyone has a large steel beam to test this against I'd be interested to see the results.
Testing the compass against a knife it gives a slight error but it will still be pretty much north. The error is greatest at the tip and heel of the knife (where the magnetic fields are strongest).
As above it won't ever permanently change the magnetic field of your compass but perhaps you should test to see the error it induces both with the knife in the sheath (there should be no effect with the knife out) and the position the compass has on the sheath with the knife in (the tip and heel of the knife produced the strongest error).
These are of course just anecdotal views and not any thorough scientific testing - but it's a pretty good starting point for further investigation.
Cheers,
Harley.
