Carl Saga was a legend in his own time...
How did Gandalf know?
In a section of Unfinished Tales called "The Quest of Erebor", Gimli asks Gandalf this very question. Here is the response he gets:
Gandalf did not answer at once. He stood up, and looked out of the window, west, seawards; and the sun was then setting, and a glow was in his face. He stood so a long while silent. But at last he turned to Gimli and said: 'I do not know the answer. For I have changed since those days, and I am no longer trammelled by the burden of Middle-earth as I was then. In those days I should have answered you with words like those I used to Frodo, only last year in the spring. Only last year! But such measures are meaningless. In that far distant time I said to a small and frightened Hobbit: Bilbo was meant to find the Ring, and not by its maker, and you therefore were meant to bear it. And I might have added: and I was meant to guide you both to those points.
'To do that I used in my waking mind only such means as were allowed to me, doing what lay to my hand according to such reasons as I had. But what I knew in my heart, or knew before I stepped on these grey shores: that is another matter. Olórin I was in the West that is forgotten, and only to those who are there shall I speak openly.'
Death knoll for Java
So, this is the hill which Java chose to die on? <ducks and runs>