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Here I will show how to make two different gouges that will help out in your sheath making.One is just a straight gouge for doing any non-precision grooving.And the second for cutting a straight even groove for stitching in.Tandy Leather does have these for $15.00 each,but I like to make most of my tools so I decided to make my own....
All you need for these is something for handles and some 1/8 inch or so rund rod that can be hardened.I used a spring clip from a tow pin.
With a torch I heated and straightened the pin into a straight rod,you could do this in a forge also.
Now flatten the ends out some,but leave them as thick as possiable as this will be ground later to make a cutting edge.
You will now need to bend one end to a ninety degree bend,approxiametl 1/2 in long.
Drill a 1/16 inch hole in the two flattened ends
Now cut the bar into two pieces.The end with the bend only needs to be 1-2 inch's long and the other one needs to beabout 4 inch's long so you can put around 2 inch's into the handle.Now I clean them up on the grinder and shape the ends so they are real close to the hole 3/4 of the way around.Then I will heat treat using the torch and I will draw the temper back with the torch to a straw color.Then clean them up again,then bevel the edge from the top into the hole 3/4 of the way around the hole,this gives you the cutting edge.If you are unsure just grind off a little and try gouging a piece of scrap leather and just keep taking a little more off until it cuts the leather cleanly.
Now I use a piece of 1/4 inch brass rod,But you can use what ever you have handy and can be drilled and tapped easily.
Drill a 1/8 inch hole through the brass rod so the cutting edge will be a little longer than the rod since you will be putting a small bolt in the end to take up this extra space.
I drilled a 1/8 inch hole in the end of the rod so it went past the cross section hole.Then I threaded the hole with with a 8-32 tap p through the cross section  hole
I put a 8-32 bolt with a screw head on it up in the hole and check to see how long it needs to be to tighten the gouge in place but only have a couple of threads showing out the end,then cut to length.
With the gouge out of the rod  I put the bolt back in and tighten it up.Then I even the head to the rod on the grinder and make it as smooth and polished as possiable.
Now drill holes in the handle material so the two rods will fit in them and epoxy them to the handle material.Then shape and finish the handles to your liking.
Here are the two I made after I finished them....You can see how they are used in my pouch sheath making tutorial.....
Thanks to Alex Daniels for showing me how to use these and how to make them..