LotR -- Book 2 - Chapter 03 - The Ring goes South

[Aiwendil]

Davem wrote:

And how much did Gandalf actually know? Why was he so insistent on passing through Moria - unless he knew of the Balrog, & the need to confront it, why would he even want to pass through?

I don't think he did. From II.5:

'A Balrog,' muttered Gandalf. 'Now I understand.' He faltered and leaned heavily on his staff. 'What an evil fortune! And I am already weary.'

Clearly he was not expecting this - in fact, the presence of the Balrog seems to resolve a mystery for him - for now he understands. Understands what? Possibly it means only that he understands what it was that used a counterspell against his earlier. But it may also have a wider sense - he understands the nature of Durin's Bane, the reason that Balin's colony did not survive, and the reason for Aragorn's premonition of danger.

But now we're getting ahead two chapters.