On June 4, Venezuela, facing continued economic distress, defaulted on a $750 million gold swap contract with the German bank Deutsche Bank AG, allowing the lender to take control of the precious metal. The agreement dated to 2016, when Deutsche Bank granted Venezuela a cash loan with 20 tons of gold as collateral, and was set to expire in 2021. However, in light of the Maduro regime’s failure to make interest payments, the agreement was cancelled early.

The cancelled agreement is part of a pattern. Between the end of 2018 and June 7, gold reserves have fallen by nearly 15%. The central bank has increasingly relied on foreign gold reserves to guarantee financial operations and as one of its only sources of foreign currency. This is the second time this year in which the beleaguered Venezuelan government has lost gold due to a failure to comply with its external commitments: in March, the Central Bank of Venezuela failed to comply with a repurchase agreement for a loan with Citibank corresponding to a $1,600 million credit operation in 2015, and Citibank took control of $1,100 million in gold. Since early 2018, Venezuela has also sold more than 40% of its gold to companies in the United Arab Emirates and Turkey in order to provide liquidity and finance government programs.