Step 1Fill the sink with enough water to come halfway up the side of a 1-quart, heavy-bottomed saucepan. Place the sugar and 1/4 cup of the water into the saucepan and cook over medium-low heat. Stir until the sugar dissolves, about 2 to 3 minutes. As the sugar melts, the mixture will go from opaque to clear. Small bubbles will form at the edge and gradually grow larger, moving toward the center of the pan. Eventually, bubbles will cover the entire surface.
Step 2After about 15 minutes, the sugar will begin to caramelize and turn in color. You'll see a progression from champagne yellow to light tea to dark tea. When smoke starts rising, remove the saucepan from the heat and slowly swirl it around. Watch the sugar closely as it will turn darker by the second; a reddish cast will set in (think the color of a big and bold red wine) as the bubbles become a lovely burnt orange. Pay attention to the color of the caramel underneath the bubbles. When the caramel color is that of black coffee or molasses, place the pan in the sink to stop the cooking process. The hot pan bottom will sizzle upon contact and the bubble action will subside.
Step 3Add the remaining 1/2 cup of water (there may be a small dramatic reaction) and place the saucepan back on the stove over medium heat, stirring until the caramel has dissolved into the water. The result will be slightly viscous; flavor-wise, it will be bittersweet. Pour the caramel sauce into a small glass jar and let it cool; it will thicken further. Store indefinitely in your kitchen cupboard.