Bundle install not finding gem in gem list - ruby-on-rails-3

Question

I am trying to add devise to my application and gem install works, but everytime I run bundle install, it does not find devise in my gemlist. I have tried including the git link and using a specific version, but it still does not find it in my gemfile.
Terminal
$bundle install
$Using rake (0.9.2.2)
Using i18n (0.6.0)
Using multi_json (1.3.6)
Using activesupport (3.2.5)
Using builder (3.0.0)
Using activemodel (3.2.5)
Using erubis (2.7.0)
Using journey (1.0.3)
Using rack (1.4.1)
Using rack-cache (1.2)
Using rack-test (0.6.1)
Using hike (1.2.1)
Using tilt (1.3.3)
Using sprockets (2.1.3)
Using actionpack (3.2.5)
Using mime-types (1.18)
Using polyglot (0.3.3)
Using treetop (1.4.10)
Using mail (2.4.4)
Using actionmailer (3.2.5)
Using arel (3.0.2)
Using tzinfo (0.3.33)
Using activerecord (3.2.5)
Using activeresource (3.2.5)
Using coffee-script-source (1.3.3)
Using execjs (1.4.0)
Using coffee-script (2.2.0)
Using rack-ssl (1.3.2)
Using json (1.7.3)
Using rdoc (3.12)
Using thor (0.15.2)
Using railties (3.2.5)
Using coffee-rails (3.2.2)
Using jquery-rails (2.0.2)
Using bundler (1.1.4)
Using rails (3.2.5)
Using sass (3.1.19)
Using sass-rails (3.2.5)
Using sqlite3 (1.3.6)
Using uglifier (1.2.4)
Your bundle is complete! Usebundle show [gemname]to see where a bundled gem is installed.
Gemfile
source 'https://rubygems.org'
gem 'rails', '3.2.5'
# Bundle edge Rails instead:
# gem 'rails', :git => 'git://github.com/rails/rails.git'
gem 'sqlite3'
gem 'devise'
# Gems used only for assets and not required
# in production environments by default.
group :assets do
gem 'sass-rails', '~> 3.2.3'
gem 'coffee-rails', '~> 3.2.1'
# See https://github.com/sstephenson/execjs#readme for more supported runtimes
# gem 'therubyracer', :platforms => :ruby
gem 'uglifier', '>= 1.0.3'
end
gem 'jquery-rails'
# To use ActiveModel has_secure_password
# gem 'bcrypt-ruby', '~> 3.0.0'
# To use Jbuilder templates for JSON
# gem 'jbuilder'
# Use unicorn as the app server
# gem 'unicorn'
# Deploy with Capistrano
# gem 'capistrano'
# To use debugger
# gem 'debugger'