Where does bundler store gems?

It depends. In the usual development setup they are installed where they would be when you install a gem "normally" (by running gem install foo) and bundler won't reinstall gems that are already there. This location depends on how rubygems itself is configured.

If you run bundle install with the --deployment option then the gems will be installed in a location unique to your app (you can pass this as a separate option but it defaults to vendor/bundle)

You can also run bundle package to store all the .gem files your app uses in vendor/cache. Running bundle install will prefer gems in vendor/cache to gems in other locations.

If you want to find out where a particular gem is stored you can run bundle info <gem-name>. For example:

user@host$ bundle info rake
/var/bundle/ruby/2.1.0/gems/rake-10.4.2

For older versions of rake, the command could be bundle show <gem_name>.