The England captain was moved into midfield following a spate of injuries to the likes of Michael Carrick and Marouane Fellaini but has netted three times in four games since being restored to his more natural position.
When asked where he felt Rooney's best position was, Cole told Goal: "As a striker. He's a central forward and if the manager trusts him in that position he can score 20 goals.
"He's also playing well as midfielder with his vision, but I believe all supporters want to see Rooney playing in his natural position. His best position is striker."
Cole also delivered his verdict on Roy Hodgson's options for the England national team ahead of their Euro 2016 qualifier with Lithuania at the end of March.
Asked who he felt was the best English striker, Cole added: "Wayne, of course, Wayne! He's a good striker, but he won't play that well as a No.9.
"But he's a good striker and he understands things. He's not a good No.9 because he tends to explore the pitch, but he can still score goals.
"He's having a difficult season, but in the national team with Roy Hodgson it's different. If he's playing as a No.9, he can be better as a No.10 along with Raheem Sterling or Daniel Sturridge."