The Dollar Pushes Lower. These ETFs Gain Most When It Falls.

Precious-metals stocks and cryptocurrencies gained on two occasions this year when the dollar index failed to break through its 50-day moving average. (MURTAJA LATEEF / AFP / Getty Images)

It’s déjà vu for the declining dollar, and that means there’s money to be made in certain assets.

The U.S. dollar index, which tracks the dollar’s moves against a basket of peers, has again failed to cross an important level. Until late last week, the currency, which has been getting clobbered this year, appeared to be staging a reversal, with a gain in the index of 1.1% from the start of the month through Thursday.

That brought it close to rising past its 50-day moving average, which would have signaled that the upswing might continue. The index hit a peak of 98.73 on Thursday, just short of its 50-day moving average of 98.85, only to run out of steam.

Instead of breaking through, the index has collapsed lower, trading at 97.87 on Monday afternoon. A similar pattern happened twice before, at the end of February and in mid May, leaving the dollar at its lowest point since early 2022 as of July 2.

Given that the currency may well repeat those moves, pressing lower again, Barron’s took at look at the assets that performed well during those earlier declines. We ran a screen to find the exchange-traded funds that outperformed the broader market from Feb. 28 to April 21, as well as from May 12 to July 2, two periods of sustained losses in the dollar after it failed to break through its 50-day moving average.

Our anti-dollar screen looked at funds with at least $1 billion in assets, excluding levered ETFs due to their volatility. To make the cut, ETFs had to achieve a positive return in the first period, from Feb. 28 to April 12, when the S&P 500 lost ground, and deliver more than the 6.56% gain in the index during the period from May until early July.

The result was a set of 30 funds. Ten of them were ETFs with links to precious metals, the most of any one sector. Gold miners were at the top of the list; the VanEck Junior Gold Miners ETF delivered returns of 34% and 15% in the February and May periods, respectively.

Platinum was a top performer in the period that began in May, with the abrdn Physical Platinum Shares ETF returning 45%, though it rose only 2.3% in the February period. The most actively traded silver fund, the iShares Silver Trust , achieved gains of 5.2% and 12%, respectively, in the February and May periods.

Seven Bitcoin ETFS and seven small-cap-related ETFs made the cut as well. The VanEck Bitcoin ETF, for example, delivered 4% and 7.7%, respectively, in the February and May periods. Schwab International Small-Cap Equity ETF delivered 2.4% and 10%. One emerging market fund showed up: The Freedom 100 Emerging Markets ETF , which returned 0.2% and 7.5%.

Jeff Jacobson, head of derivative strategy at 22V Research, highlighted silver and emerging markets as two trades that “did very well” from mid-May through end of June in a weekend research note that suggested they could perform strongly again.

With silver, “perhaps what is even more impressive now is that even as the dollar has caught a bid in July, silver is still UP ~ 6% over that time.” Jacobson wrote. “Silver’s ability to rally in the face of a stronger dollar likely speaks to the underlying bid.”

The iShares MSCI Emerging Markets ETF, the most actively traded emerging-market fund, returned 5.3% over the period from May through June. Jacobson said he likes the fund now because Taiwan Semiconductor Manufacturing, which recently reported strong earnings, is its largest component. It also gives investors “a decent amount of exposure” to Chinese names like Alibaba and JD.com, whose stocks are starting to break out again, he said.

History isn’t always a good predictor, but understanding the past can help investors to make sense of the present.

Write to Karishma Vanjani at karishma.vanjani@dowjones.com.