As Tal Cual tell us, the Peruvian government gave Simón Bolívar a sword as present after he led the troops that defeated the Spanish forces in that region. The sword has over 1400 precious stones among emeralds, diamonds, rubies and the like and its blade is made of pure gold. It is rather heavy: about 2 kilograms.
Many autocrats from Venezuela to Bolivia have used the image of Bolívar as a sort of national God they pretend to be followers of. Chávez has taken this to new extremes, even single-handedly renaming Venezuela "Bolivarian Republic of Venezuela" and claiming to represent some Marxist Bolivarianism, apparently ignoring Marx actually despised Bolívar and that Bolívar was a rather conservative man in many respects.
Tal Cual reminds us that the sword had been kept in the Central Bank as an exhibit in a special room until Chávez decided to take it away "because it was hidden from the public", even if visitors to the bank could see it. Now people can only see the sword when Chávez uses the fragile historical object on his shows, as when he took oath to his paramilitary "Milicias Bolivarianas" some weeks ago.
Chávez often gives replicas of Bolívar's sword to such friends as Mugabe, Gaddafi, Lukashenko and Akhmadinejad. The pictures you see in this post are all with the real object, not the replicas. Hence the gloves that are supposed to protect it.
Simón Bolívar is without doubt the most idolized figure in the Americas. For South Americans he is like Washington times 10. He was a fascinating man who fought for good principles like the abolition of slavery, rights of all ethnic groups and the independence. In reality he was far from being unique and in spite of all his shows, he was sick for power. Venezuela and the rest of South American nations would have got independence with or without him, sooner or later. If you want to read an interesting view about him, you can start with Karl Marx's biography of Bolívar (yes, Marx's) and then proceed to a book like Lynch's. Caballero's Por qué no soy un bolivariano is also worth reading.