The knife just bounces off, just look at it.

I think the knife should come pre-loaded, and it should launch a tool of indeterminate sharpness, which would need to be picked up and fired to reload the knife. Lua anyone?

So, to recap.

You have gun shaped like knife.
When you fire, it shoots a tool or grenade or something.
That must be picked up and fired to reload the knife, and then...
You have a reloaded knife, and the process can be repeated!
Like the Darkstorm's gatling ammo.

Thank you so much joost1120!

It doesn't bounce off. I Just couldn't be assed to made a Lua'd weapon.
It goes through the actor it hits...