My buddy has a '37 Chevy with a stock GM 350 crate engine. Temp comes up to normal then rapidly climbs to 250 then returns to normal. Only takes a minute or so to cycle up and down. continues to do this as he's driving. VDO gauge and sender, new water pump, Walker radiator with thermo controlled elect. fan. He bought new VDO gauge and sender, replaced wire from gauge to sender. Doesn't actually overheat, just indicates. Never loses any water(50/50) and no sign of water boiling in the engine. After replacing the gauge/sender/wire still has the same problem. I'm wondering if the new water pump is a reverse flow but suspect if it is, the temp would rise and stay. Sender now is in the side of the block by the headers. His next step is to move the sender to the intake and see if there is any change. He had it running last night and indicated "normal" then all the sudden climbed to 250. After a couple minutes it dropped to normal. Doesn't seem to be any connection between temp rise & fall and fan on/off points. Any takers
I fought this same problem for quite awhile. on my 39. After trying all sorts of things to get the engine to run cool we concentrated on the gauge and sender. VDO makes more than one sender and gauges with different sweeps. We found that I was using the wrong sender for my gauge. Found the correct ( correct OHM of resistance) sender and the problem went away. I spent a lot of money and time trying to correct overheating that I did not have. I know you said you bought a new gauge so this may all be useless info but I suggest you check the gauge function with a pot of boiling water and and ohm meter to see if the gauge /sender combinations working before you spend a bunch of time and or money on the cooling package. Good luck.