Some investors question whether the price of gold can continue to climb indefinitely.  Although nothing lasts forever, US monetary policy and the rise of emerging Asian economies will continue to support gold prices.

Gold has been the ultimate store of value for millennia.  The old adage is that an ounce of gold has always been able to purchase a first-rate man’s suite—be it a fine toga or the latest from Armani.   By that measure, the yellow metal remains undervalued.

The current bull case for gold largely centers on the monetary expansion in the developed world since the historic credit crunch/market crash of late 2008, particularly in the US. Rather than allow the US financial system to implode in the wake of vanishing mortgage security values, the Federal Reserve and other global central banks have attempted to prop it up by injecting unprecedented amounts of credit into the system.

It’s become fashionable to second-guess the various US Federal Reserve actions to pump more money into the system to sustain this recovery. The now-terminated second round of quantitative easing to buy back US government bonds has been widely ridiculed as ineffective for stimulating growth. Investors, however, should focus on a few hard facts.

First, having gone this far down the path, the Fed is unlikely to stop supporting the economy with easy money until growth is firmly in place. That means money growth is likely to remain a support for gold prices.

Additionally, the rise of developing Asia by necessity means devolution of power globally from the developed West. That’s not necessarily bad for the US and other western democracies. In fact, it’s more or less an affirmation of the post-World War II dream of a world with expanding trade and prosperity.

The popular perception in the West is that China and the rest of the developing world has already caught up and passed the US. In reality, the balance of global power is still overwhelmingly on these shores. What matters for investors, however, is the trend. Power is definitely shifting and the primacy of the greenback continues to lessen.

Unlike other metals, gold is not consumed for any significant industrial use. That pretty much renders moot any analysis of supply. Rather, the action in price is always a function of demand, which is based largely on psychology. The more anxious people become about the value of money, the greater their demand for gold as a store of value and the higher gold prices go.

There will come a time when the gold market experiences a sizeable correction despite the bullish long-term fundamentals. But that time is still some ways off.

Newcrest Mining’s (ASE: NCM, OTC: NCMGY) principal product is gold, which it mines mainly in Western Australia through its Telfer and Boddington projects. It also has projects in New Guinea, New South Wales, Ivory Coast and Indonesia that are expected to add considerable volume to future output.

The massive floods that struck Australia in recent months have taken their toll on production. Output for the fiscal third quarter ended March 31 fell by 16.3 percent from the second quarter to just 604,791 ounces. That was below most estimates.

But output was still 45 percent more than last year’s tally, thanks to the successful acquisition of Lihir Gold, which holds massive reserves in New Guinea. The company also produced 20,000-plus tonnes of copper, on target for full-year projections of between 75,000 and 80,000 tonnes.

The shortfall in third-quarter output has triggered similar reductions in full-fiscal year projections (end June 30). But assuming some return to normalcy in coming months, that should quickly become a bad memory on the way to surging earnings–and a much higher stock price. Returns to US investors should be further augmented by strength in the Australian dollar, which itself is a beneficiary of higher global prices for natural resources.

In New guinea, for example, the past year’s shortfall was largely due to the lowest rainfall in 15years, which prevented full operation of a major processing plant.  Troubles in Africa were largely due to unrest in Ivory Coast, which is now coming under control.  Meanwhile, Australia is moving out of the rainy season at last, which should increase production.

As for new projects, the company’s Cadia East in New South Wales–delayed by rain–has completed its engineering with “all major equipment and contracts” awarded, Newcrest’s CEO Ian Kingsley Smith said in a mid-April conference call. He added that the Bonikro project in Africa is on its way toward achieving resources “in excess of 3 million ounces.”

Meanwhile, Newcrest continues to generate substantial levels of free-cash flow, providing internal funds for mining even as its cost of capital remains low. Debt is negligible, with total equity nearly four times total liabilities.

Fiscal second-quarter results, which reflected more normal weather conditions, featured a 66 percent boost in revenue on a 70 percent jump in output, along with a near doubling of profit excluding one-time items.

One note of uncertainty is the resignation of CEO Smith, is widely respected as one of the best mining executives in Australia. Smith will hand over the reins in September to Greg Robinson, the current executive director of finance.

Smith was a passionate dealmaker who shaped Newcrest into a first-tier global gold producer. By contrast, Robinson’s chief talent is running operations, a trait that will be essential to consolidating the company’s growth.

Additionally, volatility in gold prices, weather and political developments will weigh on Newcrest’s earnings and stock price. The stock, however, is already priced at a discount to its North American peers because of these well-known issues. Consequently, it’s possible that Newcrest could deliver an upside surprise given the opportunities for expanding production.

And at its current low valuation, Newcrest remains both potential prey and predator, making a lucrative takeover yet another road to profits for investors.