Gold is weird. It doesn't pay a dividend, it sits in a vault, and half the time, people only talk about it when they think the world is ending. But if you’ve been looking into the USAA Precious Metals Fund, you probably aren't just looking for a shiny paperweight. You're looking for a buffer.
Maybe you're a veteran who has used USAA for decades, or maybe you just heard they have a decent track record with gold stocks. But here is the first thing you actually need to know: USAA doesn't actually manage this fund anymore. Back in 2019, Victory Capital bought USAA Asset Management. So, while the name on the door—and the ticker symbol USAGX—might still feel familiar, the engine under the hood is being tuned by Victory Capital’s VictoryShares team.
It’s still focused on gold. Mostly.
What the USAA Precious Metals Fund Actually Owns
People often think buying a precious metals fund is the same as buying gold bars. It isn't. Not even close. If you buy a physical ounce of gold, the price goes up a dollar, you made a dollar. Simple.
USAGX is an equity fund. That means it buys shares of mining companies.
Think about the leverage there. If a mining company spends $1,500 to get an ounce of gold out of the ground and sells it for $2,000, they keep $500. If the price of gold jumps to $2,500—a 25% increase—their profit doubles to $1,000. That’s why people love mining stocks. The upside can be massive. But honestly, the downside is just as brutal. If the gold price drops below their cost of production, that company isn't just "worth less"—it's losing money every single day it keeps the lights on.
The USAA Precious Metals and Minerals Fund (to give it its full, slightly clunky name) typically keeps about 80% of its assets in companies that mine, process, or deal in gold, silver, platinum, or palladium.
You’ll see names in the portfolio like Newmont Corp or Barrick Gold. These are the titans. But they also dabble in "junior" miners. Those are the smaller, riskier companies that are still trying to prove they’ve found a massive vein of ore in the middle of nowhere. It’s high-stakes stuff.
The Expense Ratio Reality Check
Let's talk about the "cost of admission."
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Investing isn't free, but some funds are definitely more expensive than others. The USAGX expense ratio usually hovers around 1.15% to 1.20%. In a world where Vanguard offers ETFs for 0.04%, that feels like a gut punch. You have to ask yourself if the active management—the actual humans picking which mines are going to strike it rich—is worth that extra 1%.
For some, the answer is yes because mining is a specialized field. You need geologists and analysts who understand sovereign risk in places like Ghana or Peru. For others, that fee is a dealbreaker.
Why Diversification Isn't Just a Buzzword Here
Most people buy this fund because they want a "hedge."
When the S&P 500 takes a nose dive, gold often (but not always) moves the other way. It’s the "flight to safety." However, since this fund owns stocks, it can sometimes get dragged down during a general market panic even if gold prices stay steady. Investors sell what they can, not just what they want to, and big mining stocks often get caught in the crossfire.
You've got to be okay with volatility. This isn't a "set it and forget it" bond fund. It’s a rollercoaster.
The fund also includes "minerals." This is a key distinction. While gold is the primary driver, exposure to silver or platinum group metals adds an industrial component. Silver is used in solar panels and electronics. Platinum is used in catalytic converters. So, you aren't just betting on people being scared of inflation; you're also betting on industrial demand.
The Victory Capital Shift
When Victory Capital took over, a lot of USAA members were nervous. USAA has this legendary reputation for service and "having your back."
The good news? The transition was mostly administrative. The investment philosophy didn't pull a 180-degree turn overnight. They still focus on high-quality miners with strong balance sheets. They look for companies that can survive even if gold prices stagnate for a few years.
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But you should know that you’re now part of a much larger corporate machine. The "member-owned" feel of the old USAA investment wing is gone. If that matters to you, it might be worth looking at specialized boutiques. If you just care about the ticker symbol in your brokerage account, it's business as usual.
Performance: The Long Game
If you look at the 10-year chart for USAGX, it’s a jagged mountain range.
There were years, like 2016 or parts of 2020, where the fund looked like a genius move. There were other stretches where it stayed flat while the tech sector was minting millionaires.
Gold is a long-term play. It’s insurance. You don't buy car insurance hoping to get into a wreck; you buy it so you don't go broke if you do. This fund functions similarly in a portfolio. Most experts (the real ones, not the guys selling gold coins on late-night TV) suggest keeping precious metals to about 5% or 10% of your total pie.
Going "all in" on the USAA Precious Metals Fund is a massive gamble on a single sector. Don't do that.
Common Misconceptions About USAGX
One of the biggest mistakes people make is thinking this fund pays a high dividend. It doesn't.
Mining is capital intensive. It costs a fortune to build a mine. Most of the money these companies make goes back into the ground or into paying off debt. While some of the big players like Newmont have started paying more consistent dividends lately, the fund itself is focused on capital appreciation. You're betting the share price goes up, not that you'll get a fat check in the mail every quarter.
Another thing? Taxes.
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Because this is an actively managed fund, the managers are buying and selling stocks inside the fund. This can trigger capital gains distributions. Even if you didn't sell your shares of the fund, you might end up with a tax bill at the end of the year. This is why many people prefer to hold USAGX in an IRA or a 401(k) rather than a standard taxable brokerage account.
Is it Better Than an ETF?
This is the million-dollar question. Why buy USAGX when you could just buy GDX (the VanEck Gold Miners ETF)?
- GDX is passive. It just tracks an index. It's cheaper.
- USAGX is active. The manager can say, "Hey, this specific mine in South Africa has massive labor issues, let's sell it." An ETF can't do that.
If you believe that the gold market is "inefficient"—meaning you think a smart person can spot winners and losers better than a computer—then the USAA fund makes sense. If you think the market is mostly efficient and no one can consistently beat the index, just buy the cheaper ETF and save yourself the fees.
Actionable Steps for Your Portfolio
If you are seriously considering the USAA Precious Metals Fund, don't just jump in because you're worried about the news. Take a breath and follow a logical path.
First, check your current exposure. You might already own Newmont or Barrick through a total market index fund. You don't want to accidentally double-weight yourself into gold miners without realizing it.
Second, decide on your "why." Are you looking for a short-term trade because you think inflation is about to spike? Or are you looking for a permanent 5% "disaster insurance" slot in your retirement plan? If it's the latter, the volatility of USAGX is easier to stomach.
Third, look at the fees. If you are investing $1,000, a 1.2% fee is $12 a year. Not a big deal. If you are moving $100,000, that’s $1,200 a year, every year, regardless of whether the fund goes up or down. At that level, the fee starts to really eat into your compounding.
Lastly, consider the entry point. Buying gold at all-time highs is a classic retail investor mistake. Gold tends to move in cycles. If everyone on social media is screaming about how gold is going to $5,000, it might actually be the worst time to buy. The best time to look at the USAA Precious Metals Fund is usually when no one is talking about it and the "gold bugs" have gone quiet.
The USAGX remains a solid, if expensive, vehicle for betting on the companies that pull wealth out of the earth. It has survived management changes and market crashes. Just make sure you're buying it for the right reasons—and that you've got the stomach for the swings.