Not sure what you have for a setup, but IMO, I would say the guage is faulty by what you are saying. Only way to truely test it, is to pull it off and have it done at your local parts store. It sounds like my oil gauge, works great at start up at 55 and then drops to 20 or 0 depending on how much rpm's it is at.
85' CJ7 Laredo, 383 GM, Turbo 350, NP 203. SOA, 2" frame lift, 34" TSL swampers, Dana 30 open, AMC 20 w/ detroit locker, 4:10's, 1 Piece Mosers, 35" boggers to abuse when needed.