The story is told by Snorri Sturluson in Skáldskaparmál:
It is related that when certain of the Æsir, Odin and Loki and Hœnir, went forth to explore the earth, they came to a certain river, and proceeded along the river to a waterfall. And beside the fall was an otter, which had taken a salmon from the fall and was eating, blinking his eyes the while. Then Loki took up a stone and cast it at the otter, and struck its head. And Loki boasted in his catch, that he had got otter and salmon with one blow. Then they took up the salmon and the otter and bore them along with them, and coming to the buildings of a certain farm, they went in. Now the husbandman who dwelt there was named Hreidmarr: he was a man of much substance, and very skilled in black magic. The Æsir asked him for a night's lodging, saying that they had sufficient food with them, and showed him their catch. But when Hreidmarr saw the otter, straight way he called to him his sons, Fáfnir and Reginn, and told them that the otter their brother was slain, and who had done that deed.
Now father and sons went up to the Æsir, seized them, bound them, and told them about the otter, how he was Hreidmarr's son. The Æsir offered a ransom for their lives, as much wealth as Hreidmarr himself desired to appoint; and a covenant was made between them on those terms, and confirmed with oaths. Then the otter was flayed, and Hreidmarr, taking the otter-skin, bade them fill the skin with red gold and also cover it altogether; and that should be the condition of the covenant between them. Thereupon Odin sent Loki into the Land of the Black Elves, and he came to the dwarf who is called Andvari, who was as a fish in the water. Loki caught him in his hands and required of him in ransom of his life all the gold that he had in his rock; and when they came within the rock, the dwarf brought forth all the gold he had, and it was very much wealth. Then the dwarf quickly swept under his hand one little gold ring, but Loki saw it and commanded him to give over the ring. The dwarf prayed him not to take the ring from him, saying that from this ring he could multiply wealth for himself if he might keep it. Loki answered that be should not have one penny left, and took the ring from him and went out; but the dwarf declared that that ring should be the ruin of every one who should come into possession of it. Loki replied that this seemed well enough to him, and that this condition should hold good provided that he himself brought it to the ears of them that should receive the ring and the curse. He went his way and came to Hreidmarr's dwelling, and showed the gold to Odin; but when Odin saw the ring, it seemed fair to him, and he took it away from the treasure, and paid the gold to Hreidmarr. Then Hreidmarr filled the otter-skin as much as he could, and set it up when it was full. Next Odin went up, having the skin to cover with gold, and he bade Hreidmarr look whether the skin were yet altogether hidden. But Hreidmarr looked at it searchingly, and saw one of the hairs of the snout, and commanded that this be covered, else their covenant should be at an end. Then Odin drew out the ring, and covered the hair, saying that they were now delivered from their debt for the slaying of the otter. But when Odin had taken his spear, and Loki his shoes, and they had no longer any need to be afraid, then Loki declared that the curse which Andvari had uttered should be fulfilled: that this ring and this gold should be the destruction of him who received it; and that was fulfilled afterward.
Two kennings for gold are Ótr's Ransom and Forced Payment of the Æsir.
- Sigurðarkviða Fáfnisbana II.
- Skáldskaparmál, 32, 39.