If you happen to have gauges on your Cougar (because not all of them had gauges), you depend upon them for accurate information at all times...well, as accurate as factory gauges get, anyway. But if your gauges suddenly stop working or start acting erratically, you also know how frustrating that can be. The key to every gauge working depends upon the integrity of the car's electrical system; if you've got a problem under the hood, it can show up through your gauge readings. Therefore it's best to work backwards until you get the source of the problem. If you have the proverbial warning ("idiot") lights, this also applies to you too.
First off, if you have not changed the ignition switch, that would be the first place to check for issues. A bad ignition switch, or faulty wiring to the switch, will cause a lot of issues to occur with the car, including intermittent charging and drivability problems, but usually one of the first indicators is that the gauges will do abnormal things every once in a while. Please have this inspected and changed first.
It's also important to note that the oil, temp, amp and fuel gauges run off 5 volts, not 12. There is an instrument voltage regulator (IVR) that is on the backside of the cluster, and its job is to reduce the 12v power coming in down to 5v. It's similar to a 9v battery; in fact, it snaps right on just like one. Ford's been using that same part since 1971 so it used to be a common part at any Ford dealer (p/n D1AZ-10804-A) and it could be the source of your problem. Be aware that it's sometimes very difficult to find this part anymore, even at parts stores, so you may end up scouring eBay or even a salvage yard to find one from another cluster. You can find instructions on replacing the IVR on YouTube here.
The direct signal to each gauge comes from a sending unit found around the car or on the engine block at various locations. The temp gauge relies upon the temperature sensor (top of the intake manifold); the fuel gauge depends upon the fuel sending unit (inside the gas tank); the amp gauge/light works via the ammeter (hardwired inline); and the oil gauge/light works from the oil pressure sending unit (from the block, around the oil filter area). Now obviously there's a wire running from each sensor to its corresponding gauge. Normally the problem is that the sending unit itself has gone bad due to age and normal usage. Or, perhaps it's that the wire is usually in close proximity to the motor, and if the wires get hot enough over time, the casing can melt or rub through and touch metal...giving you haywire readings. Those are your first places to look for trouble. You can remove the suspected unit and check it for corrosion, and also check the wiring. On the 5.0L V8 engines, the wire running to the oil pressure sending unit just loves to get all tangled up around the a/c and power steering brackets. And the 3.8L V6 can throw a temperature sensor in a heartbeat. So if your light comes on (or your gauge goes all the way to HOT) when you know that the car isn't that warm just yet, that's a good place to start. The sensors themselves are not very expensive, and you might even want to replace them every few years as part of routine maintenance. To test the gauge in question, remove the wire from the sending unit, start the car, and momentarily ground the wire, then reconnect. If the gauge moves at all, the sending unit is probably bad. If it doesn't move, then the gauge is bad.
If you've checked the wiring and gauges, then the next place to look is the alternator area. It's possible that you have a bad voltage regulator, and that would definitely affect your gauges almost instantly. They also go bad with time and usage, and are not usually a problem to find or replace. But while you're there, be sure to inspect the wiring going to the alternator itself. Notice that the wires are of a heavier gauge; that's due to the heat and voltage load that the wires have to endure every time you drive the car. Now those wires can break loose from brittleness, or pull away, or rub against metal, or arc electricity over to the block....get the picture? And your gauges will reflect this abnormal behavior. This is a SERIOUS and POTENTIALLY DANGEROUS situation! In fact, when you buy a new or remanufactured alternator, there is sometimes a new wiring harness included for the alternator that you MUST install. There have been fires under the hoods of Ford autos with bad alternator wiring. So please inspect the wiring as soon as you can, and if you do get a new alternator, either install the new wiring yourself or have a shop do it for you. No matter the expense...it's worth it to save your car from a potential disaster.
If this still hasn't helped then you must look to the rest of the ignition system: the starter solenoid, distributor cap/rotor, spark plugs/wires, or your even battery itself can cause the gauges to work erratically. Obviously if you have an amp gauge, you should notice the level drop (or the light will come on if you have a light); that indicates a big time problem somewhere—be sure to have it checked out ASAP. And, if all else fails, you go right back to Point A: the gauges themselves. Now they are usually pretty reliable, but they can conk out on you. It's usually best to check them last though, just to make sure the rest of the system is operating correctly.
So what about the speedometer and tachometer? Well, the 1983-84 Cougars have a traditional speedometer cable that attaches to the transmission housing. If the cable squeaks really loudly and consistently, there could be a lack of lubrication or even a faulty speedometer head (gauge), but usually that indicates that the cable should be replaced. Beginning in 1985, all Cougars have electronic speedometers. That's right, no cable; the signal is sent to the computer (again, via a sensor on the transmission called the vehicle speed sensor, or VSS), and it in turn sends the information to the speedometer. The Cougars and Thunderbirds were actually one of the few Fords in the mid-80's to have electronically-fed speedos. So when the needle (or digital numbers) start to go wonky, the speedometer sensor on the transmission housing is the place to start. The wiring is held on by one lonely little 11mm bolt; once removed, voilá! There's a small colored gear on the end that goes inside the transmission casing. It's called the speedometer driven gear (NOT the drive gear, which is internal) and the teeth can wear out, especially if you have a gear in an automatic transmission with over 21 teeth. Now you'll need to take the gear off the VSS (one clip, very simple) and take it to the Ford dealer, where you can purchase/order a new one, or you can look for one online. Also, it could be a bad VSS unit; that's known to happen with higher-mileage cars. Fortunately it's cheap and should definitely help the situation. Again, keep in mind that the VSS is a direct hot line to the computer.
Now if the gear's not bad, and the VSS isn't bad, then your gauge has just gone on you. It's a fairly expensive fix at a speedometer shop but you might be able to get one at the salvage yard. Now the digital speedos are a real nightmare. They're designed to be tamper-proof...so that means they're not meant to be fixed by a do-it-yourselfer. You either have to have it repaired professionally or force yourself to get another cluster and use it, with its incorrect odometer and all. No way to reset that either. The 1985-88 analog speedos (XR7's and V8 sport models) are more traditional in design and will allow replacement or repair as necessary. If you suspect that you need your speedometer fixed, you can always use a search engine for a list of shops. They can usually give you a price quote over the phone or via e-mail.
The tachometers are also electronic. They run off the signal from the ignition coil, by the strut tower nearest the battery (dark green wire with the white stripe). If you happen to have bad wiring then the tach signal can go erratic. But the biggest offender to a bad tach reading is a faulty wire running from the coil to the distributor cap...you know, the spark plug wire-looking wire. If you have the original or an old wire that could be your problem.
As you can see, the causes for erratic gauge behavior are plentiful. Whenever you start to deal with electricity on a Ford vehicle, you're in for a real treat, so be prepared for the worst and hopefully you'll come out on top very quickly. Remember, the gauges are the windows to the inner workings of your car, whether intentional or faulty.