1.“Peak Oil” theory. As shown in chart below, NYMEX Feb 09’s crude oil price is $40.8 and Dec 09’s price is $58.45. Though it is unlikely that the oil price will be back to its all time high of $147 set last summer, it is unlikely to stay in the $40 range too long either. In theory, traders can physical buy oil at $40.8, rent tankers to store it, then sell at $58.45 a year later and make a nice 43% premium. (Of course you need to deduct interest charges and storage costs, including insurance.)

Canada is basically a resource-based economy. According to Yahoo Finance, Industrial Materials (15.6%) and Energy (26.3%) sectors account for more than 41.9% of EWC, with such main players in industry such as Canadian Natural Resources (CNQ), Encana Corp. (ECA) and Suncor Energy Inc. (SU).

2.The US dollar will plunge. With a trillion+ dollars of stimulus planned, sooner or later the US dollar will depreciate. Accordingly, foreign country ETFs such as EWC will appreciate, other things being equal. Besides, you certainly want gold in your portfolio if you believe US dollars will plunge. The biggest and second biggest gold companies (based on market cap) in North America are Canadian companies: Barrick Gold (ABX) and Goldcorp Inc (GG).

3.Thanks to the Canadian government’s conservative regulation, Canada’s financial system is in much better shape than the US’s.

4.Unlike the US’s proposed $1.2 trillion deficit in 2009, Canada is the only G8 country still running a surplus (until last month).

5.For years, the US unemployment rate was around 1% – 1.5% lower than Canada’s. However, now it is 7.2%, while Canada’s is 6.6%.

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