Over on Facebook, Arthur Harrow raises a point of logic:

“all that is gold does not glitter” means “nothing that is gold glitters” like the difference between “all refrigerators are not Frigidaires” and “not all refrigerators are Frigidaires.” It seems to me that JRRT would know the proper grammar; do you think there is significance to this?

The common proverb, of course, is “all that glitters is not gold”, which is a useful thing to remember.  Tolkien twists it around for his narrative purposes.  But I have learned that he thought about the roots of words as much as he thought about their current meanings, so I think this is JRRT having some fun with etymology. According to my go-to source on the Web,

c. 1300, glideren (late 14c. as gliteren), from an unrecorded Old English word or from a Scandinavian source such as Old Norse glitra “to glitter,” from Proto-Germanic *glit- “shining, bright” (source also of Old English glitenian “to glitter, shine; be distinguished,” Old High German glizzan, German glitzern, Gothic glitmunjan), from PIE *ghleid- (source also of Greek khlidon, khlidos “ornament”), from root *ghel- (2) “to shine,” with derivatives referring to bright materials and gold. … Other Middle English words for “to glitter” include glasteren and glateren.

Etymologically, everything that is gold glitters, by definition.

gold ring on black background

Does not glitter

But if we look at a modern dictionary, “glitter” means “sparkle”. The stuff that people throw around to celebrate is called glitter because of light sparkling off its cut edges, not because of the metallic sheen of the plastic it’s made from. The old meaning of shining like gold has passed over to “gleam”.

So, apart from its purpose in the story, “all that is gold does not glitter” is using the precise logical meaning that Arthur identified to make a wry comment on a change in the English language.