Gold is weird. Honestly, it’s one of the few things people buy specifically because they’re worried about everything else failing. When the economy feels like a dumpster fire, people flock to shiny yellow bars. But you don't necessarily want to keep physical gold bars under your mattress because, let's be real, that's a security nightmare. That's where something like the USAA Precious Metals and Minerals Fund (USAGX) comes in. It’s been a staple for military families and savvy investors for decades.
You’ve probably noticed that the name on the door changed recently. If you go looking for "USAA" on the Victory Capital website, you’ll find it, but it’s technically managed by Victory Capital now. This happened back in 2019 when USAA sold its asset management business. It’s still the same fund in spirit, but the corporate plumbing is different.
Why the USAA Precious Metals and Minerals Fund is Different
Most people think a gold fund just tracks the price of gold. It doesn’t. Not this one, anyway. This is an equity fund. That basically means the managers aren't just buying gold bullion and sitting on it in a vault. Instead, they are buying stocks in the companies that dig the stuff out of the ground.
Mining stocks are a whole different beast compared to spot gold. Think of it as a lever. If the price of gold goes up 10%, a mining company’s profit might jump 30% because their costs to dig it up stayed the same while their selling price soared. But—and this is a big but—it works both ways. If gold prices dip, these stocks can absolutely crater.
The fund doesn't just stick to gold, either. It ventures into silver, platinum, and palladium. It’s a bit of a mix. While gold is the big driver, the "minerals" part of the name matters. You're getting exposure to industrial demand too, not just the "end of the world" insurance policy that gold represents.
The Management Factor
Victory Capital’s team handles the day-to-day now. They look for companies with strong balance sheets and "long-life" mines. You don't want a miner that’s going to run out of ore in three years. You want the giants. We’re talking about names like Newmont Corp or Barrick Gold.
The fund has historically been known for being a bit more conservative than some of its "junior miner" competitors. Junior miners are basically the tech startups of the gold world—lots of potential, but they go bust constantly. USAGX tends to lean toward the established players. It’s safer, sort of. Well, as safe as mining for rocks in volatile geopolitical climates can be.
The Reality of Fees and Performance
Let’s talk money. You can’t ignore the expense ratio. For a long time, the USAA Precious Metals and Minerals Fund had a reputation for being relatively affordable compared to other actively managed gold funds. Currently, the expense ratio sits around 1.15% to 1.20% depending on the share class.
Is that high? Yeah, compared to a Vanguard S&P 500 index fund that costs almost nothing. But for active management in a niche sector like precious metals? It’s pretty standard.
Performance is a roller coaster. If you look at the 10-year chart, it’s enough to give you whiplash. In 2020, when the pandemic hit and everyone panicked, this fund was a star. In years where the dollar is strong and the Fed is hiking rates, it can be painful to watch. Gold generally hates high interest rates because gold doesn't pay a dividend. If you can get 5% from a Treasury bond, why hold a rock that does nothing?
Tax Implications You Might Not Expect
Here is something most people miss. Because this fund deals with "collectibles-adjacent" assets and international mining companies, the tax situation can get funky.
- Capital gains distributions can happen even if the fund's price went down for the year.
- Many of the holdings are in Canada, South Africa, or Australia.
- Foreign tax credits sometimes flow through to shareholders, which is a nice little bonus at tax time, but it makes your Form 1040 more annoying.
Who Actually Needs This Fund?
If you're putting 50% of your life savings into the USAA Precious Metals and Minerals Fund, you’re basically gambling. Most financial advisors—the honest ones, anyway—will tell you that precious metals should be a "spice" in your portfolio, not the main course. Maybe 5% to 10%.
It serves as a hedge. When the stock market gets punched in the face, gold often (but not always) stands its ground. It’s about non-correlation. You want something that moves differently than your Apple and Amazon stocks.
Misconceptions About Gold Mining
People think mining is just about the price of gold. It's not. It's about the price of oil.
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Wait, what?
Think about it. To run a massive gold mine, you need huge machines. Those machines run on diesel. If the price of gold goes up, but the price of oil triples, the mining company might actually make less money. You have to watch the "All-In Sustaining Costs" (AISC). If a company can't get its AISC below $1,200 an ounce, they're in trouble if gold prices soften. The managers of USAGX spend their whole day looking at these spreadsheets so you don't have to.
How to Buy and Hold
You can buy it directly through Victory Capital, or through most major brokerage platforms like Charles Schwab or Fidelity. If you're an existing USAA member, you probably still see the link in your portal, which makes it convenient.
Don't day trade this. It’s too volatile. The bid-ask spreads and the way mining stocks move make it a nightmare for "timing the market." Most people who find success with USAGX use it as a long-term diversifier. You buy it, you forget about it, and then one day when the news is screaming about inflation and the dollar collapsing, you check your account and realize your gold fund is the only thing in the green.
Geopolitical Risks are Real
Mining happens in some tough places. Whether it's labor strikes in South Africa or tax disputes in South America, these companies face risks that a software company in California just doesn't deal with. The USAA Precious Metals and Minerals Fund spreads this risk out across dozens of companies, which is way safer than picking one single mining stock. If one mine gets nationalized by a rogue government, it sucks, but it won't ruin your whole investment.
Actionable Steps for Investors
If you're considering jumping into the USAA Precious Metals and Minerals Fund, don't just click "buy" and hope for the best.
- Check your current exposure. You might already own Newmont or Barrick Gold if you have a broad "Basic Materials" ETF. Don't double dip by accident.
- Look at the "Class A" vs. "Institutional" shares. If you're buying through a brokerage, check if there’s a transaction fee. Some platforms charge $50 every time you buy a mutual fund that isn't on their "no-transaction-fee" list. If that's the case, look for an ETF alternative or buy in larger chunks.
- Set a rebalancing rule. Decide now that if the fund grows to more than 10% of your total pie, you'll sell the excess and put it back into boring stuff like index funds. This forces you to "sell high," which is something humans are naturally terrible at doing.
- Watch the Dollar (DXY). Generally, when the U.S. Dollar is weak, this fund flies. If you think the dollar is going to remain the king of currencies for the next decade, this fund might face some serious headwinds.
The USAA Precious Metals and Minerals Fund remains a solid, professionally managed way to bet on the "hard money" sector without having to store actual bullion. It’s volatile, it’s sometimes frustrating, but in a diversified portfolio, it plays a role that few other assets can fill. Just keep your position size reasonable and your expectations in check.