For our first "Bulls & Bears" 2011 feature on Hard Assets Investor, we turn to a hot topic over the past few months: silver. Although gold nabs most of the headlines, it's silver that has truly outperformed—the metal's price soared an astonishing 84 percent last year, beating 30-year highs and sparking questions about a possible impending bubble.

Can silver rise even further?

For the bearish view on silver, we spoke with Jim Lowell, chief investment strategist at Adviser Investments and editor of the Fidelity Investor newsletter.

HAI : You were big on silver last year. But you sold off all your positions recently. What made you change your mind?

Jim Lowell, editor of Fidelity Investor : Any time anything goes up over 100 percent inside of a 12-month time frame, I ask myself whether it's going to get better or worse ahead.

We put silver into our model portfolios back in March or April of last year with a very bullish call, using the ProShares Ultra Silver ETF [NYSE Arca: AGQ]. Since we purchased it, that position had risen about 178 percent—enough to, in and of itself, trigger some gains-taking.

But back then, I didn't just buy the ProShares Ultra Silver ETF. I paired it with the ProShares Ultra Short Gold ETF. So what I was really doing was making a bearish call on gold, but saying that I thought I was probably early on that call, and wanted to offset it with a good enough hedge. So that, if I was wrong, I'd be able to still come out ahead.

Net-net, that pairing gave us about a 58 percent return. Gold was up about 26 percent last year. So this year, the sale of silver was triggered by taking gains, but also, I wanted to get out of gold just wholesale. I just wanted to be out of the metal. Because gold, of course, has no real industrial applications the way silver does. You can't build a catalytic converter without silver, for example.

At these levels, you've really got to ask yourself what will propel gold much higher. And, if gold can't go much higher, then silver really can't either, since it trades as a multiple on the fear trade of gold.

HAI : Is that fear still present in the marketplace?

Lowell : Absent the eurozone collapsing, I think that fear is dissipating. The themes and threads of global economic recovery are definitely getting twisted a little bit tighter and stronger, even if they're still uneven, at best.

So my call to get out of silver and to get out of gold reflects the fact that I think the gold trade is done. I think silver as a correlated trade is likely mostly done. There are also better places to put your money that didn't rise 178 percent last year. In particular, I wanted to build up a position in RPG, the Rydex S&P 500 Pure Growth ETF.

My sense is that precisely what has kept individual investors away from the market and loading up on gold for the last 2 1/2 years is what's going to drive them finally back into the market this year; namely, the dissipation of fear. But they're not going to chase the smaller-cap, the higher-risk stocks. They're going to look for battleship balance sheets, liquidity and probably even yield. That definitely favors the mega cap side of the market.

So we got out of gold, out of silver—out of gold chips into blue chips.

HAI : We hear a lot of talk about gold being in a bubble. Is silver getting overheated too?

Lowell : Absolutely. I think those bubbles tend to inflate in a correlated manner. It's very rare that silver trades up sustainably without gold doing likewise. And the inverse is also true. It's very rare that gold starts selling off and silver doesn't follow suit.

In neither metal is there a supply problem. Wherever you are trading a commodity that has had multiple significant run-ups year-over-year, without any supply problems, you've got to really zero in on the psychology of demand. So I think both metals head south sometime this year, I think probably sooner rather than later.

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