Gold's shining rally has taken a beating, but prominent gold booster Peter Schiff believes that the precious metal's time isn't over, thanks to his expectation of Federal Reserve hesitation.

Gold was pacing for its worst day since December 2013 on Tuesday, plummeting almost 3 percent as the U.S. dollar gained due to increasing expectations that the Fed is set to raise rates in December.

Rising rates tend to be bad for gold because they make nonyielding gold look worse in comparison. Rising rates also tend to increase the value of the dollar, which also hurts gold because each more-valuable dollar can buy more gold.

Schiff sees gold's rough Tuesday as a result of investors selling the metal in anticipation of a rate hike. But Schiff believes investors have it all wrong. The Fed's main condition for interest rate hikes is that economic data, particularly employment and inflation data, have shown an improving economy.

"I'm certain that all this talk about a recovery is wrong," Schiff said Tuesday on CNBC's "Futures Now." "The recovery is an illusion, it's just another gigantic bubble."

Schiff believes that economic data has "actually gotten a lot worse since [the Fed] didn't raise rates in September." Add on the uncertainty surrounding November's presidential election, and Schiff is doubtful that the Fed will even risk raising interest rates this year.

"Everybody wants to go to heaven, but nobody wants to die, and that is the problem," said Schiff. "We're never going to have a real recovery until we kill this phony recovery, but for political reasons, that's not going to happen."

Schiff, who has runs a gold selling business, has long been a critic of the Fed's policies, and is perennially bullish on gold. He has long been predicting collapses in the U.S. economy and the stock market that have not materialized.

The fed funds futures market currently pins the chance of the Fed raising rates by December at 63 percent, according to CME Group's FedWatch tool.