This photo shows a very common type of damage: the edge of the sound hole has been worn down by picking. If you’re on a tight budget, there is a way of repairing this damage by filling in the gouge with resin or some other filler. But in the case of a very valuable vintage guitar like this, then proper restoration should be done.
The damage here is located in about one-fifth of the inner ring. The wood on the edge is missing, and part of the inside plastic ring is also partially missing.
Note that the thickness of the black and white lines must be exactly the same as the original. When removing the damaged section, cut straight along “the winter” grain, which is the dark line of grain. The grain width of the spruce for the new section should be the same as the original. The diameter of the round part that touches the plastic line must also be the same as the original. After the new section is glued in, the edge of the sound hole can be adjusted at the very end of the process.
The last thing to do is make the new section look old. This is done by grinding off the summer grain a little bit using a fine wire brush to make it look like natural wear.