SCAM WATCH: What is the ‘Silver Snowball’ Con?

snowball, silver snowball, silver snowball scamQ: How can I avoid being conned by the ‘Silver Snowball’ scam?

A: The Silver Snowball Scam goes like this: you (the target) buy a couple of silver Eagles each month and recruit others to buy a couple of Eagles as well. For every three people you enroll, you’ll get a free eagle. Sounds like a great deal – except the price you’re paying is 40% over the spot price. It only works for the people at the top of the pyramid. Here’s the math:

For this example, let’s assume the spot price on silver is $30.

You buy three Eagles for $42 each from Snowball, Inc.

You then recruit three people to do the same. They each buy three Eagles from Snowball, Inc., and you get a free Eagle.

Now you have four Eagles and paid a total of $126 – an average of $31. The actual fair market value is about $34 for an Eagle. So you’ve done well – you got the Eagles at a 10% discount on average.

But your recruits bought three Eagles for $42 each and didn’t sign anyone up. Their average price is $42 per coin – 30% more than they would have if they bought them from a reputable dealer. Part of that extra went to subsidize your Eagles, and the rest went to the company running the Silver Snowball Scam. If it sounds too good to be true, IT IS!