Somewhere Hugo Chavez, who several years ago successfully repatriated much of Venezuela's gold, is spinning in his grave.

It started in March, when Venezuela's embattled leader Nicolas Maduro defaulted on a $1.1 billion gold-backed loan with Citi, in the process losing several tons of gold placed as collateral by Venezuela’s central bank after the deadline for repurchasing them expired. Now, Bloomberg reports that Venezuela has also defaulted on a gold swap agreement valued at $750 million with Deutsche Bank, prompting the German bank to seize the precious metal which was used as collateral, and close out the contract.

Maduro and a stack of 12 Kilogram gold ingots.

As part of a financing agreement signed in 2016 which we profiled here, Venezuela received a cash loan from Deutsche Bank and put up 20 tons of gold as collateral. The agreement, which was set to expire in 2021, was settled early due to missed interest payments as Venezuela has now effectively run out of foreign reserves.

It was the second time this year that the Maduro's regime has failed to make good on financing agreements which have resulted in losses at a time when gold reserves are already at a record low. As we have noted previously, for example in "Venezuela Prepares To Liquidate Its Remaining Gold Holdings To Pay Coming Debt Maturities" Venezuela's dwindling gold holdings had become one of Maduro’s last remaining sources of cash keeping his regime afloat and his military forces loyal. Before the central bank missed the abovementioned March deadline to buy back gold from Citigroup for nearly $1.1 billion, the Bank of England refused to give back $1.2 billion worth of Venezuelan gold.

Meanwhile, as Bloomberg reports, opposition leader Juan Guaido’s parallel government has asked the bank to deposit $120 million into an account outside President Nicolas Maduro’s reach, which is the difference in price from when the gold was acquired to current levels.

"We’re in touch with Deutsche Bank to negotiate the terms under which the difference owed to the central bank will be paid to the legitimate government of Venezuela," said Jose Ignacio Hernandez, Guaido’s U.S.-based attorney general. “Deutsche Bank can’t risk negotiating with the central bank’s illegitimate authorities," particularly after it was sanctioned by the U.S. government, Hernandez said, even though the military has stubbornly refused to go along with the US attempted government coup, leaving the seized gold in limbo.

While insolvent Venezuela, which defaulted on its dollar-denominated bonds in 2017, is becoming increasingly cut off from the global financial network due to sanctions, it still managed to sell $570 million in gold last month, prompting total foreign reserves to tumble to a 29-year low of $7.9 billion.

Meanwhile, Venezuela has not only become a symbol of the destructive influence of socialism and associated hyperinflation, but a case study of how to obliterate the only real hard currency left when everything else is gone: the government managed to blow through more than 40% of Venezuela’s gold reserves last year, selling to firms in the United Arab Emirates and Turkey in a desperate bid to fund government programs and pay creditors.