bundle crashing with `error!': 302 "Moved Temporarily" (Net::HTTPRetriableError)

Gday all,

Tried creating a new rails app with 3.2.0 on MRI 1.9.3 running under
RVM 1.10.2, and it crashes on bundle with the following trace:

brentona@brails:~/rails_3.2.0$ bundle
Fetching source index for https://rubygems.org/
/home/brentona/.rvm/rubies/ruby-1.9.3-p0/lib/ruby/1.9.1/net/http.rb:
2632:in `error!': 302 "Moved Temporarily" (Net::HTTPRetriableError)
  from /home/brentona/.rvm/rubies/ruby-1.9.3-p0/lib/ruby/1.9.1/net/
http.rb:2641:in `value'
  from /home/brentona/.rvm/rubies/ruby-1.9.3-p0/lib/ruby/1.9.1/net/
http.rb:795:in `connect'
  from /home/brentona/.rvm/rubies/ruby-1.9.3-p0/lib/ruby/1.9.1/net/
http.rb:755:in `do_start'
  from /home/brentona/.rvm/rubies/ruby-1.9.3-p0/lib/ruby/1.9.1/net/
http.rb:750:in `start'
  from /home/brentona/.rvm/rubies/ruby-1.9.3-p0/lib/ruby/site_ruby/
1.9.1/rubygems/remote_fetcher.rb:321:in `connection_for'
  from /home/brentona/.rvm/rubies/ruby-1.9.3-p0/lib/ruby/site_ruby/
1.9.1/rubygems/remote_fetcher.rb:368:in `request'
  from /home/brentona/.rvm/rubies/ruby-1.9.3-p0/lib/ruby/site_ruby/
1.9.1/rubygems/remote_fetcher.rb:203:in `fetch_http'
  from /home/brentona/.rvm/rubies/ruby-1.9.3-p0/lib/ruby/site_ruby/
1.9.1/rubygems/remote_fetcher.rb:231:in `fetch_path'
  from /home/brentona/.rvm/rubies/ruby-1.9.3-p0/lib/ruby/site_ruby/
1.9.1/rubygems/spec_fetcher.rb:265:in `load_specs'
  from /home/brentona/.rvm/rubies/ruby-1.9.3-p0/lib/ruby/site_ruby/
1.9.1/rubygems/spec_fetcher.rb:231:in `block in list'
  from /home/brentona/.rvm/rubies/ruby-1.9.3-p0/lib/ruby/site_ruby/
1.9.1/rubygems/spec_fetcher.rb:227:in `each'
  from /home/brentona/.rvm/rubies/ruby-1.9.3-p0/lib/ruby/site_ruby/
1.9.1/rubygems/spec_fetcher.rb:227:in `list'
  from /home/brentona/.rvm/gems/ruby-1.9.3-p0@global/gems/
bundler-1.0.21/lib/bundler/source.rb:253:in `fetch_all_remote_specs'
  from /home/brentona/.rvm/gems/ruby-1.9.3-p0@global/gems/
bundler-1.0.21/lib/bundler/source.rb:234:in `block in remote_specs'
  from /home/brentona/.rvm/gems/ruby-1.9.3-p0@global/gems/
bundler-1.0.21/lib/bundler/source.rb:231:in `each'
  from /home/brentona/.rvm/gems/ruby-1.9.3-p0@global/gems/
bundler-1.0.21/lib/bundler/source.rb:231:in `remote_specs'
  from /home/brentona/.rvm/gems/ruby-1.9.3-p0@global/gems/
bundler-1.0.21/lib/bundler/source.rb:165:in `fetch_specs'
  from /home/brentona/.rvm/gems/ruby-1.9.3-p0@global/gems/
bundler-1.0.21/lib/bundler/source.rb:70:in `specs'
  from /home/brentona/.rvm/gems/ruby-1.9.3-p0@global/gems/
bundler-1.0.21/lib/bundler/definition.rb:159:in `block (2 levels) in
index'
  from /home/brentona/.rvm/gems/ruby-1.9.3-p0@global/gems/
bundler-1.0.21/lib/bundler/definition.rb:158:in `each'
  from /home/brentona/.rvm/gems/ruby-1.9.3-p0@global/gems/
bundler-1.0.21/lib/bundler/definition.rb:158:in `block in index'
  from /home/brentona/.rvm/gems/ruby-1.9.3-p0@global/gems/
bundler-1.0.21/lib/bundler/index.rb:7:in `build'
  from /home/brentona/.rvm/gems/ruby-1.9.3-p0@global/gems/
bundler-1.0.21/lib/bundler/definition.rb:157:in `index'
  from /home/brentona/.rvm/gems/ruby-1.9.3-p0@global/gems/
bundler-1.0.21/lib/bundler/definition.rb:151:in `resolve'
  from /home/brentona/.rvm/gems/ruby-1.9.3-p0@global/gems/
bundler-1.0.21/lib/bundler/definition.rb:90:in `specs'
  from /home/brentona/.rvm/gems/ruby-1.9.3-p0@global/gems/
bundler-1.0.21/lib/bundler/definition.rb:85:in `resolve_remotely!'
  from /home/brentona/.rvm/gems/ruby-1.9.3-p0@global/gems/
bundler-1.0.21/lib/bundler/installer.rb:43:in `run'
  from /home/brentona/.rvm/gems/ruby-1.9.3-p0@global/gems/
bundler-1.0.21/lib/bundler/installer.rb:8:in `install'
  from /home/brentona/.rvm/gems/ruby-1.9.3-p0@global/gems/
bundler-1.0.21/lib/bundler/cli.rb:219:in `install'
  from /home/brentona/.rvm/gems/ruby-1.9.3-p0@global/gems/
bundler-1.0.21/lib/bundler/vendor/thor/task.rb:22:in `run'
  from /home/brentona/.rvm/gems/ruby-1.9.3-p0@global/gems/
bundler-1.0.21/lib/bundler/vendor/thor/invocation.rb:118:in
`invoke_task'
  from /home/brentona/.rvm/gems/ruby-1.9.3-p0@global/gems/
bundler-1.0.21/lib/bundler/vendor/thor.rb:263:in `dispatch'
  from /home/brentona/.rvm/gems/ruby-1.9.3-p0@global/gems/
bundler-1.0.21/lib/bundler/vendor/thor/base.rb:386:in `start'
  from /home/brentona/.rvm/gems/ruby-1.9.3-p0@global/gems/
bundler-1.0.21/bin/bundle:13:in `<top (required)>'
  from /home/brentona/.rvm/gems/ruby-1.9.3-p0@global/bin/bundle:19:in
`load'
  from /home/brentona/.rvm/gems/ruby-1.9.3-p0@global/bin/bundle:19:in
`<main>'

I have no problems with bundle under Rails 3.1.3 on the 1.9.3 or
1.9.2, however do have the same error under Rails 3.2.0 with 1.9.2.

We are behind a proxy, and proxying is working fine for http, https
and ftp on this machine.

I am not sure how to debug this, and would appreciate any assistance.