Finding himself without a sheath for the knife, he carefully slides it through his belt, where he can keep the hilt in place with his elbow while displaying his now empty hands. (If it incidentally makes it a little harder for her to make a grab for it, that's not the worst thing.)

"On Andraste, I don't know. I know it sounds mad." He doesn't try to close the distance she's created between them, only sparing a rough glance for the other pairs. "But I truly don't know. And surely if I were going to lie, I think of something less idiotic to say."

...he assumes. Maybe he's a bad liar, but he hopes if so it won't undercut his point.