The platinum exchange traded fund (ETF) is up modestly this year, but if those in the know are to be believed, next year its ship (or catalytic converter) could come in.

Compared to gold and silver, platinum has been a bit of a wallflower this year, but certain fundamentals are aligning that could well result in the metal becoming the life of the party in 2011.

  • The leading maker of catalytic converters reported a 72% increase in sales in the first half of the year, says Murray Coleman at Barron’s. If car and truck sales continue to improve, platinum will directly benefit. [Forget Gold; Look At the Platinum ETFs.]
  • Tougher emisssions standards also benefit the platinum market. In both Europe and the United States this year, these standards were raised.  [Get Ready for an Onslaught of Metals ETFs.]
  • Growing economies also support platinum. It’s used in electronics, hard disk drive coatings and fiber optic cables, so improvements in personal computer buying should give platinum a lift, says Kevin Grewal for Daily Markets.
  • Tight supplies also contribute to rising platinum prices. South Africa is anticipating a decline in production, thanks to issues with power outages, labor and the strength of the rand against the U.S. dollar. That strength reduces miners’ income and limits their ability to invest in new operations, Javier Blas for The Financial Times reports.

If you’re looking for an alternative to gold and a position with room to run and favorable fundamentals, consider platinum. Because it has a heavy industrial component, however, keep an eye on any funds you own to make sure you don’t miss a selling opportunity when sentiment goes negative.  ETFS Physical Platinum (NYSEArca: PPLT) is one of the most direct ways to own the metal; each share is backed by a portion of bullion stored in vaults. If you don’t want to go all-in on platinum, ETFS White Metals Basket (NYSEArca: WITE) is a new offering that’s a diversified mix of platinum, palladium and silver.

Tisha Guerrero contributed to this article.

The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.