July 07, 2025

From Deficit to Gold Boom

Market Commentary

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On July 4, 2025, President Donald Trump signed into law the “Big Beautiful Bill” (BBB), a sweeping package that combines tax cuts, immigration spending, and welfare reforms.

Officially called the One Big Beautiful Bill Act, the legislation includes:

The permanent extension of Trump’s 2017 tax cuts
A higher child tax credit
Tax breaks for tipped workers
A temporary increase in the SALT deduction cap
Over $120 billion in border security funding
Cuts to clean energy tax incentives
Stricter work requirements for Medicaid and food stamps

Framed by Trump as an “all-in-one” political win, the bill aims to deliver broad-based appeal, but comes at a fiscal cost.

Behind the patriotic celebration, however, lies a deeper concern: how will this bill impact the U.S. budget and global markets?

While the White House claims the bill will reduce the deficit by $1.4 trillion, critics disagree.

Senator Amy Klobuchar estimates it could increase the deficit by $4 trillion, and the Congressional Budget Office (CBO) projects the bill will add at least $3.3 trillion to the national debt over the next decade, primarily due to the permanent tax cuts.

The debate centers on how much those tax cuts will actually boost long-term economic growth versus how much revenue they’ll cost the government.

According to Bloomberg data, the U.S. debt to GDP ratio has surged to 124%, meaning the country’s debt is now larger than its entire economy.

With rising deficits and continued borrowing, the US fiscal path is becoming increasingly unsustainable.

Historically, there’s a strong positive correlation between rising US deficits and gold prices.

The more the government borrows, the weaker the dollar tends to become, driving investors toward gold as a hedge against inflation, debt, and currency risk.

As markets anticipate larger deficits from BBB, expectations of a major gold rally are growing, making gold stocks, especially in emerging markets, increasingly attractive.

Among the top beneficiaries is BRMS (PT Bumi Resources Minerals Tbk).

With 5 million ounces of gold reserves, BRMS is one of Indonesia’s largest gold players.

Since its Rp1.6 trillion rights issue in 2021 and the entry of a strategic partner, the company has fully funded its expansion, tripled production capacity, and emerged as one of the fastest growing gold producers in the country.

Backed by strong fundamentals and a favorable global outlook, we maintain a BUY rating on BRMS, with a target price of Rp750/share, supported by its rapid growth, solid reserve base, and powerful macro tailwinds from rising US debt and gold demand.

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