One of the worst trades of the year—gold—presents even more opportunity in the long term, U.S. Holdings Chairman Rick Rule said Wednesday.

"I think the fundamentals for gold are pretty good," he said. "If you're a momentum trader, of course, you don't want to be anywhere near it. If you're a fundamental investor, the fact that it's down but its utility stays good makes it a better buy than it's ever been."

Gold, which has lost about 25 percent of its value this year, fell 0.3 percent to $1,257 per ounce in the spot market Wednesday, a day after hitting a three-week high.

(Read more: Gold falls on news of US budget deal)

On CNBC's "Halftime Report," Rule explained why he believed gold wasn't seeing a rush from nervous investors.

"I don't think we do have a fear trade because I think there's a lot of misplaced confidence in a lot of factors," he said, adding that risks in the market were very real. "The idea that Washington is suddenly functional, I think, is fictional."

(Read more: Cramer: 'Something up' with DC's budget deal)

Rule, who oversees $84 million in assets, added that the federal government was "not any closer to solving structural issues" in the economy.

Liquidity vs. solvency

"I think the big thinkers of the world, … the Obamas, the Yellens, the Bernankes, have convinced us that liquidity is a substitute for solvency, but I don't suspect it is," Rule said. "If you had a million-dollar mortgage, $60,000 income, if you had $10,000 in your pocket today you'd be liquid. You'd be OK today, but you wouldn't be solvent.

"The confidence in the economy that we have right now is a function of the fact that the liquidity in the market [has] driven markets. But liquidity is not—repeat, not—a substitute for solvency."

(Read more: As funds get massively short, gold could spike)

Rule said he expected gold to see another selloff before heading higher within the next two years.

"I think what the market needs to turn around is capitulation selling," he said. "The bottom of the last four bear markets in commodities has been marked by absolute capitulation selling."

Rule also said he was bullish on platinum and palladium, "which have all of the precious metals attributes going for them but also have [a] supply/demand crunch that's beginning to form."

(Read more: Here's what was behind gold's wacky jobs reaction)

"I'm also attracted to the uranium space, where the price of the metal is about half what it costs to produce," he added. "And my pick, pick, pick of the decade, certainly living out here in California, is water, a very underappreciated resource."

The bear case for gold

OptionMonster's Pete Najarian wasn't a buyer.

"I look at gold right now, and it's been in a storm that should have attracted folks toward gold. It didn't," he said. "And going into 2014, as the economy improves and as people start to gain more confidence, I really don't see gold being a factor that's going to the upside."

Earlier this week, RBC technician George Davis made the case that gold could head $200-per-ounce lower to $1,060.

"Eventually, we will see a retest of the $1,180 area," Davis said Tuesday on CNBC's "Futures Now."

(Read more: Gold can go much lower: RBC's top technician)

Once bullion breaks below that level—its 2013 low—"we're going to see an increase in bearish sentiment that potentially takes us down to $1,100 initially and potentially the $1,060 level," he added.

Despite his bearish view on gold, Davis also said the metal would likely spike in the near term before heading lower.

"Over the next week or two, we could see a corrective rally that potentially takes us up toward the $1,310 area," he said. "A lot of the technical indicators are oversold, so I think you have to be waiting to scale into the short positions."

But 2014 would be unkind to bulls, added Davis, who said he expected gold to break below $1,180 in mid-January or mid-February. "And if it that breaks, look out."

— By CNBC's Bruno J. Navarro. Follow him on Twitter @Bruno_J_Navarro.