Three days ago, when we reported that following Trump's latest sanctions targeting Venezuela's gold sector president Maduro was seeking to repatriate all of Venezuela's gold - some 14 tons - held at the Bank of England, we cautioned that since the BoE "sought to clarify what Venezuela wants to do with the gold", this suggested that despite Venezuela being the rightful owner of this gold, Venezuela was about to face challenges in getting it back.

Today, the worst case - for Venezuela's president - was confirmed, when the Times reported that the Bank of England has "refused to release the gold bars" worth just over $550 million to President Nicolas Maduro.

According to the Times, the reason the BoE has refused release is due to its insistence that standard measures to prevent money-laundering be taken — "including clarification of the Venezuelan government’s intentions for the gold."

“There are concerns that Mr. Maduro may seize the gold, which is owned by the state, and sell it for personal gain,” the newspaper said.

Separately, as we reported on Monday, an official told Reuters that the repatriation plan has been held up for nearly two months due to difficulty in obtaining insurance for the shipment, needed to move a large gold cargo: “They are still trying to find insurance coverage, because the costs are high,” an official told Reuters.

As we reported on Monday, Venezuela’s gold located at the BoE was previously used as collateral until last year, backing loans up to several billion dollars from global banks.

Maduro is not the first to attempt to repatriate the country's gold. Venezuela's late socialist leader Hugo Chavez, sensing which way the wind is blowing and citing the need for Venezuela to have physical control of central bank assets, in 2011 repatriated around 160 tonnes of gold from banks in the United States and Europe to the central bank in Caracas. But some of Venezuela’s gold remained in the Bank of England. Starting in 2014, Venezuela used this gold for “swap” operations in which global banks lent Venezuela several billion dollars with the gold as collateral.

Meanwhile, as shown in the chart above, Venezuelan central bank statistics show the central bank’s gold holdings by June this year had dropped to 160 tonnes from 364 tonnes in 2014, as some of the swap agreements expired without Venezuela returning the funds - leaving the gold in the hands of the banks. By 2017, swap agreements with Caracas became impossible due to U.S. sanctions, which blocked U.S. financial institutions from bankrolling any new financing operations, while leaving the legal fate of pledged gold in limbo.

Last week, Washington imposed new restrictions against Venezuela targeting the country's gold exports, accusing the Maduro government of "looting" Venezuela's stocks of the precious metals amid the country's economic crisis. The sanctions, which target US individuals and companies trading in Venezuelan gold, was announced by US National Security Advisor John Bolton last week, with Bolton also branding Caracas a member of a "troika of tyranny" along with Cuba and Nicaragua.

Venezuela has made a concerted effort to become a major gold exporter, and is engaged in certifying some 32 gold fields, and building 54 processing plants in a bid to become what Maduro said would be "the second largest gold reserve on Earth."