I don't know that I'd call Russell's argument directly fallacious, in the sense of fallacy-as-invalidity, but I think that the absence of modal qualifiers makes it either indirectly invalid (on some level) or perhaps just unsound. Consider the difference between the following propositions:
- All actual/existent golden mountains are golden.
- All possible-but-nonexistent golden mountains are (or would be, if actualized) golden.
If we work with (1), then we get the "bad" conclusion that there are some golden mountains in the "real world" (except that (1) is already "messed up" in that it is tantamount to a universal quantification and an existential quantification all in one, but so the latter dimension of the proposition is already false). But (2), at worst, just gives us abstract objects that sustain "being golden" (perhaps by a Zaltaesque encoding relation), and the eventual inference to, "Some possible mountains are golden," could be reformulated in line with actualist sensitivities as, "There is some actual mountain that could have been, or could become, golden," or, "It is possible to take all the gold in the world and make a mountain out of it" (although note that the USGS website says that only 244,000 tons of gold have been found on Earth to date, whereas an average mountain's weight is on the order-of-magnitude of millions of tons).
Another way to look at the problem is by noting the difference between universal generalization and universal instantiation. So consider:
- {All golden mountains in general are golden.} → {Generally, if there are golden mountains, then there are mountains that are golden.}
- {Every particular golden mountain is golden.} → {There is a particular mountain, which is golden, somewhere.}
(3) comes across as somewhat pointlessly tortuous, like it's a kind of sentence that we would rarely have any pragmatic reason to say, write, or explicitly believe, but otherwise it doesn't seem "bad." (4) also sounds kind of "silly," or then false (as far as the eventual conclusion goes). But so still, it is important to keep track of the generality/particularity distinction, here, since the one condition leads us towards the "bad" idea that there really are golden mountains somewhere, while the other leads us to a merely redundant fact about what would be true if there were golden mountains here or there.△△△
△△△Actually, it's not absolutely obvious that there aren't golden mountains anywhere, after all, at least if our definition of the word "mountain" is flexible enough. For perhaps one might think that an asteroid with a lot of gold in its composition is mountain-like enough to count, or more generally that in our incredibly vast universe, there could well be at least one planet with so much gold, shunted about and somewhere to the surface, such that there is at least one mountain on that planet that is effectively "made of gold."
Postscript: it might be worth mentioning that the prevailing theory of modality in much older times was the "statistical" theory, where, "X is possible," comes out to, "X has existed or will exist at some point in time," and, "X is necessary," comes out to, "X exists at all times." There, actuality has logical priority over possibility. So maybe one aspect of Russell's opposition to Aristotelian logic involved a "paradigm shift" in prevailing theories of modality. I don't know that Aristotle himself defined possibility and necessity in the "statistical" manner, but if he did, then the nature of the problem of existential import, there, must be rather different from the manner of this problem in a modern context. So while Russell objects to, "All golden mountains are golden," for leading, Aristotelianism-wise, to the existence of particular golden mountains, yet if Aristotle thought that golden mountains (or whatever) were possible, he would have meant to say that there have been or will be golden mountains somewhere, someday. So again, maybe there is a problem with Russell's argument in that he is holding an older system of (implicit) modal logic to a standard that is not quite proper to that logic's semantics?