This just started happening, the speedo needle is all over the place. Its not a GPS, I assume it comes off the hull or the drive?

Whats the solution for it?

Is this on your Formula? Original VDO (black) guages?

Non-GPS speedometers use a pitot tube pickup to push a column of air to the speedometer head. The faster you go, the harder the column of air pushes and the higher the needle goes. There are pickups built into drives (leading edge) and pickups that are hull mounted. In either case, if the pickup leaves the water, the pressure drops and so does the needle.

The pickup for my Gaffrig speedometer is mounter to my transom, right next to the pad. In any kind of rough water, it leaves the water all the time - bouncing the needle all over the place.

Other than your pickup leaving the water, all I can think of is a leak in the tubing that holds pressure for a bit, then relieves it - dropping the needle.

I am not sure if this applies to the gauges that you have but usually if you start to see the needles bouncing or moving sporadically it is due to corrosion and or lack of ground.
I would start but checking all of the wiring leading to your gauge for either corrosion, loose wires and or positive feedback through the negative wire. I have seen this happen to other gauges on my own boat after the toggle switches get wet allowing a small amount of power to feed back into the negative wires.

Yup, the black VDO gauges on the 292.. Just started doing it and its not leaving the water, its bouncing even at 30mph

The power to the speedo should only affect the backlighting, not the operation of the needle. Since you have an older boat, and I do not remember what year Merc added the speedo pickup in the front of the lower unit, I would check to see if you have a pitot on the transom. If so, it may not be in a fixed position anymore and is bouncing up and down off the water as you run. Or, it could be fixed but has been knocked up by a chunk of wood or something in the water and is too high now to get a consistant reading.

The only electricity going to an older pitot style speedometer is for the back lighting. The movement of the needle is based on air pressure on a diaphram.

Here's a thought. Remove the line from the back of the speedometer. Blow backwards through the line to first make sure it's clear. (You can sometimes aspirate water up into the line.) Next, assuming it's clear, plug the other end manually and see if you have any leaks. (You can also do this by running water up the line with the speedo head disconnected, but make sure you get the water out later.) Finally, blow into the back of the actual speedo and see of the needle bounces at steady pressure - which could mean a ruptured diaphram.

Pulled the tube and water is running out of it.. Looks like it got into the back of the speedo too.. dangit!

That might not be a big issue. Pull the speedo head out and vacuum / shake out the water. Blow the water back out of the line. Then, try running it. What probably happened though is that you have an issue in the speedo head which allowed air to pass through it instead of pressing against it. That would explain how the water got up the tube. Unless you have a leak in either the head or the line, you should always just have a column of air there.