Some Guidelines for Bucking Ups and Downs of Economy

Question: How do you factor in the new year’s inflation rate on collectible prices?--G.T.

Answer: A general rule of thumb is that as the inflation rate climbs, the purchasing power of the dollar declines. At the same time, many collectible categories appreciate in value as investors switch cash out of banks and savings and loans and into what they perceive to be inflation hedges. These areas could be anything from gems to coins, stamps or autographs.

During the double-digit inflation days of the 1970s, there was heavy capital flight out of financial institutions and into many different collectible categories. The point was that this cash--called “smart money” at the time--was searching for something tangible that could weather the inflation storm. Gold, real estate, artwork, almost anything with an appreciation potential--and this included myriad collectibles--soared in value.

But what goes around comes around, and the 1980s have seen a dramatic decline in the inflation rate. This doesn’t necessarily mean that collectibles plunged in value as the inflation barometer took a dive. What has occurred is that collectibles have not appreciated at the soaring pace of the 1970s.

(Supply and demand is always the exception to this rule, and rare collectibles in good condition tend to buck inflation trends.)

Many economists do not see a return to the double-digit inflation days of the 1970s in the near term and are looking for only moderate inflation by the end of this year. For most collectors, this means they will have to judge their collections on intrinsic values and not rely heavily on the economy when they turn to the marketplace for profits.

Q: In purchasing an old chair at a flea market, what are some of the things we might have looked for to make sure it was not a recent reproduction?--P.C.

A: We generally don’t write about sophisticated art objects or valuable antiques (such as furniture) in a column aimed at a wider audience that collects lower-cost collectibles. But we will make an attempt to offer some general tips on a potentially valuable piece of furniture--that is, your chair.

Look for indicators of age, such as natural wear marks and scratches from constant handling over the years. Exceptions to this rule are items that simply have been kept out of public use for years and therefore are in mint condition. In this latter case, you’ll have to do some reading in a public library reference section to study furniture design of various periods.

Ronald L. Soble cannot answer mail personally but will respond in this column to questions of general interest about collectibles. Do not telephone. Write to Your Collectibles, You section, The Times, Times Mirror Square, Los Angeles 90053.