I have just encountered and solved this issue on a new Mac running Sierra. There seems to be no solution for ImageMagick 7 at this time.
Uninstall existing imagemagick if needed Install version 6:
brew install imagemagick@6
Since this is keg-only, you should then force-link it:
brew link --force imagemagick@6
This installed imagemagick version 6.9.7-4 for me.
Afterwards, the gem then installed successfully