Yeah, with fungible items you can easily do it, but you don't because all of them have the natural transformation into pure paper.
For instance, you could borrow a gold ingot and run through the whole thing. But there's no point in that since the validity of the whole thing rests on your creditworthiness and how good that contract is. So you might as well never borrow the real ingot and just write in the rest of the clause of how you are entitled to delivery of the ingot. That way you can trade them.
For shorts to be viable you just need sufficient liquidity that you know you won't fail to deliver on your side of the thing. Which is why fungible goods are easiest.
For instance, you could borrow a gold ingot and run through the whole thing. But there's no point in that since the validity of the whole thing rests on your creditworthiness and how good that contract is. So you might as well never borrow the real ingot and just write in the rest of the clause of how you are entitled to delivery of the ingot. That way you can trade them.
For shorts to be viable you just need sufficient liquidity that you know you won't fail to deliver on your side of the thing. Which is why fungible goods are easiest.