Figured it out. Geektool 3 doesn't know about the /usr/local/bin Path. Here is what you have to do:
1 - For the command, you need to pre-pend the path to convert in the call to the command:
Code:
date | /usr/local/bin/convert -rotate 10 -background none -fill white -pointsize 22 text:- -trim ~/label.png
2 - Point an image geektool to label.png
Attaching screenshots. In the first one, disregard the < after the filename, that is a typo.
Just so everyone else knows, I've installed Geektool 3 in addition to Nerdtool so I can now debug issues with scripts and that program.