Platinum-focussed fund company Best Asset Class, which has seen heavy redemptions in the past few months, said current low valuations added to the case for investing in a metal for which global demand can only increase long term.
Bernard Loriol, who founded the firm in 2004 to invest in platinum equities and Africa's natural resources, said weaker metal prices and pressure on company margins meant it had lost about 30 percent of its outstanding units, equal to $11 million (7 million pound), since mid-June and now managed $35 million.
Loriol said he liked miners such as Anglo Platinum
Platinum group metals equities are trading at their valuations lows. One should invest in these companies because the sector is cheap, Loriol told Reuters in an interview.
According to Thomson Reuters Datastream, the JSE Platinum index trades at 18.9 times its earnings, compared with a five-year average of 27. Anglo Platinum's price-to-earnings ratio(P/E) is 14.1, against a five-year average of 23.3.
Loriol also saw potential in Anooraq Resources
He said platinum prices could reach $2,000 per ounce in 2012, while there was potential for profit margins of companies in the sector to rise 10 percent.
Spot platinum was quoted at around $1,555 an ounce on Tuesday, down 18 percent from a peak three months ago but up 10 percent over the past six weeks.
The factor that could create a surge in demand next year could be investment demand in a run for real assets, should the dollar enter into a free fall.
He said long-term prospects for platinum prices remained positive as the world would need more of the metal in future for its unique chemical and physical properties.
Not only for the car industry in order to reduce emissions, the metal will be in demand from jewellery manufacturers.
Loriol said the sector could witness more consolidation longer term order to cut costs and facilitate access to capital.
The BAC Mining Regions fund fell 30.9 percent in the year to October, when measured in Swiss francs. In contrast, the benchmark JSE platinum index <.JPLAT> lost 37.6 percent, taking into account moves in the Swiss franc and rand, Loriol said.
(Editing by Dan Lalor)