What Are Fungible Goods?

Fungible goods refer to securities, or other items, that are equivalent or consist of many identical parts such that, for practical purposes, they are interchangeable﷽. Material items, securities, and other financial instruments ﷽may be considered fungible goods. If goods are sold by weight or number, then they are probably not fungible goods.

Understanding Fungible Goods

In finance and investing, commodities, common shares, options, and dollar bills are examples of fungible goods. The term "fungible" is not identical with barter or liquidity. A good traded by barter is not necessarily equivalent to the exchanged commodity in units. In other words, it is possible to barter products of different or incomparable value. An item is said to be liquid if you can easily exchange it ꧒for money or another good. A fungꦏible good is not necessarily a liquid one.

A 澳洲幸运5开奖号码历史查询:commodity must be fungible before it can be traded on a commodities exchange. A specific grade of commodity, such as No. 2 yellow corn, is a fungible good because it does not matter where the corn grew; it is essentially the same product. All corn des▨ignated as No. 2 yellow cor♓n is worth the same amount.

Stocks are considered to be fungible goods. It makes no difference at all if 澳洲幸运5开奖号码历史查询:Warren Buffett or another famous investor once owned the shares. Cross-listed stocks are also fungible goods. It does not matter if you purchased a share of 澳洲幸运5开奖号码历史查询:International Busine𒅌ss Machines (IBM: NYSE) in the United States via the 澳洲幸运5开奖号码历史查询:New York Stock Exchange (NYSE) or in the United Kingdom through the 澳洲幸运5开奖号码历史查询:London Stock Exchange (LSE).

Because listed options are considered fungible goods, it is possible to close out positions by taking offsetting positions. For example, if you sell (write) a 澳洲幸运5开奖号码历史查询:call option, you can close out the position by buying a call with the same underlying asset, expiration date, and 澳洲幸运5开奖号码历史查询:strike price—their components are equivalent. This is known as 澳洲幸运5开奖号码历史查询:buying to close.

Non-Fungible Goods

Assets like diamonds, land, or✅ baseball cards are 🧜not fungible because each unit has unique qualities that add or subtract value. For instance, because individual diamonds have different cuts, colors, sizes, and grades, they are not interchangeable, so they cannot be referred to as fungible goods.

Real estate is never genuinely fungible. Even on a street of identical houses, each houseཧ experiences different levels of noise and traffic, is in varying states of repair, and has unique views of surrounding areas.

Fungibles and Enumeration

When fungibles are given numbers, they may no longer be fungible. Adding unique numbers to bars of gold, collectibles, and other fungibles makes it possible to distinguish them. Thus, they may no longer be fungible in some cas🌄es.

Gold is naturally fungible because one ounce of gold is equivalent to another ounce of gold. Gold bars may be given unique serial numbers and purchased by particular investors while still being held by a custodian. Under this arrangement, gold is said to be allocated. Allocated gol🙈d holders generally have better legal protections in the event of a bankruptcy. They own particular bars of gold, which are not considered to be fungible goods.