Motivation for Ramanujan's mysterious $\pi$ formula

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The following formula for $\pi$ was discovered by Ramanujan: $$\frac1{\pi} = \frac{2\sqrt{2}}{9801} \sum_{k=0}^\infty \frac{(4k)!(1103+26390k)}{(k!)^4 396^{4k}}\!$$

Does anyone know how it works, or what the motivation for it is?

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Here's an easy introduction to the basics, "Pi Formulas and the Monster Group".

http://sites.google.com/site/tpiezas/0013

Update: Just to make this more intriguing, define the fundamental unit $U_{29} = \frac{5+\sqrt{29}}{2}$ and fundamental solutions to Pell equations,

$$\big(U_{29}\big)^3=70+13\sqrt{29},\quad \text{thus}\;\;\color{blue}{70}^2-29\cdot\color{blue}{13}^2=-1$$

$$\big(U_{29}\big)^6=9801+1820\sqrt{29},\quad \text{thus}\;\;\color{blue}{9801}^2-29\cdot1820^2=1$$

$$2^6\left(\big(U_{29}\big)^6+\big(U_{29}\big)^{-6}\right)^2 =\color{blue}{396^4}$$

then we can see those integers all over the formula as,

$$\frac{1}{\pi} =\frac{2 \sqrt 2}{\color{blue}{9801}} \sum_{k=0}^\infty \frac{(4k)!}{k!^4} \frac{29\cdot\color{blue}{70\cdot13}\,k+1103}{\color{blue}{(396^4)}^k}$$

See also this MO post.

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The explanation for the existence of this series is given here. Search for the phrase "The general form of the series is" to locate it. The series cited in the question appears immediately before the explanation.

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Here is a nice article Entitled: "Ramanujan's Series for $\displaystyle\frac{1}{\pi}$ : A Survey", by Bruce C.Berndt. This article appeared in the American Mathematical Monthly *August/September* 2009. You can see it here.