In a medium saucepan combine the sugar and water and cook over medium-high heat until the sugar is dissolved. Use a pastry brush dipped in hot water to brush down any crystals from the sides of the pan. Increase the heat to high and continue to cook until the sugar is a medium-dark amber color, about 8 minutes. (The length of time will vary depending on the stovetop as well as on the saucepan you are using.)

Remove from the heat and carefully add the butter. Using caution, slowly add the heavy cream ? the mixture will splatter and bubble up. Swirl the pan until the sauce is smooth and the heavy cream is thoroughly combined. Remove from the heat and stir in the nuts. Let cool for 15 to 20 minutes, then transfer to a fondue pot over a low flame and serve warm, with dipping items of choice.