Los Pumas led 14-0 at the break before Wales got back into the match with a try by Sam Cross but Santiago Alvarez's converted try put the title beyond the reach of Paul John's side.
The defeat ended a disappointing day for Wales after they had finished top of their group in qualifying.
England dominated the Cup quarter-final to run out comfortable 33-12 winners.
Former Wales Under 20 winger Ashley Evans opened the scoring before Marcus Watson's converted try put England ahead for the first time and they never released their grip. Wales were dealt a severe blow when Thomas was forced off with a shoulder injury.
Gaining possession from kick-offs proved a major stumbling block throughout the tournament for Wales and from the restart Watson grabbed his second before Davies exploded past Dan Bibby to score from 50m out to bring Wales back into contention but touchdowns from Phil Burgess and Mat Turner put England into the Cup semi-finals while Wales were condemned to the Plate.
Wales reached the Plate final but only after knocking out Kenya in 'golden time' after the scores were locked up at 19-19 at the hooter.
Evans was the hero when he scored under the posts after Rhys Jones stepped through a ruck to set up Rhys Shellard who off-loaded to the side-stepping winger to put Wales into the final but that proved one step too far as Los Pumas gained the honours.
Wales will have little time to recover as they head for the Cell C Nelson Mandela Bay SA Sevens this weekend in Port Elizabeth where they face defending champions New Zealand, Portugal and USA in Pool C.