“Buy now while prices are low. Inflation is just around the corner. When inflation comes, prices will shoot through the ceiling!” So goes the story of buy now or you’ll “miss the boat”.
Inflation as a short fix
Hobbies that depend on the return of inflation as the only method to get prices rising are “dead hobbies”. These hobbies are dead because the collector base isn’t able to push prices up by itself.
A hobby that needs inflation to get its prices moving is just looking for a “quick fix”. Inflation is only a short-range solution to the long-term problem of a lack of new interest. Inflation pushes up hobby prices because investors are unloading money by buying items that will retain purchasing power.
Collectibles as safe havens
Collectibles are considered a safe harbor from which to weather the inflationary storm. When investors rush in, demand increases and therefore prices rise. It’s a self-fulfilling prophecy.
As soon as a healthy profit is realized by investors or the fear of inflation subsides, prices usually come back down. This is because most of the investors sell. They have no intention of holding items for several years since they aren’t collectors. They only came to protect their purchasing power and/or to make a quick profit. Prices generally return to about the same level they were before the investor buying spree.
A hobbyist’s point of view
From a collector’s point of view, it’s better to be in a hobby not concerned with inflation as a way to get prices moving. This is because you’ll get more permanent and steady price increases over a period of years as the number of collectors in the hobby increases. You’ll also miss the rapidly rising and quickly declining prices since collectors have a tendency to hold on to pieces and not sell just because prices are up.
Collectors buy hobby pieces because they want them, not just so they can make a quick profit. Besides, from the collector’s point of view, it takes a lot of time and work to put together a nice collection. Once a nice collection is sold, it takes years to form another one.
The next time a hobby mentions “the return of inflation will get things going”, remember, it’s the collector who has to live with the mess after the “party” of rising prices is over.
Copyright 1987 by Greg Tunks
