This sweet bread, or its fancily shaped and decorated descendants, is the traditional festival bread of both the Azores and mainland Portugal. It may be twisted up with almonds for Easter, studded with diced candied fruits for Twelfth Night, or simply baked as is. There are dozens of variations on the theme: Some of the breads contain no saffron, some are sweeter than others, some are more buttery or eggy.
First make a sponge: Crumble the saffron strands into the water and let stand 15 minutes. Meanwhile, combine the yeast, 1 tablespoon of the sugar, and 1 cup of the flour in a large warm bowl, pressing out all lumps. Pour in 2/3 cup of the saffron mixture, whisking all the while until smooth. Cover with a dry cloth and set in a warm, draft-free spot until spongy, light, and doubled in bulk -- about 30 minutes.
As soon as the sponge has risen, stir it down, then beat in the remaining sugar, saffron mixture, the butter, and the egg. Now, one by one, beat in the egg yolks. Finally, add the remaining flour, a cup at a time -- the dough will be too soft and sticky to knead at this point. Transfer it to a large, warm, well buttered bowl, butter your hands, then pat the top of the dough gently all over so that it is nicely buttered, too. Cover with a dry cloth, set in a warm, draft-free spot, and allow to rise until doubled in bulk -- 45 to 50 minutes.
Toward the end of the rising period, preheat the oven to hot (425F.). When the dough has risen impressively, punch it down well and divide in half. Knead each piece of dough 35 to 40 times on a lightly floured pastry cloth, shape into a ball, and place in a well-buttered 7-inch charlotte mold or deep metal pan (use 1-pound coffee tins if necessary). Cover the loaves with a dry cloth, set in a warm, draft-free spot, and again let rise until doubled in bulk -- about 20 minutes.
Bake the loaves on the middle oven rack, positioned so that they do not touch the oven walls or each other, about 25 minutes or until the loaves are puffed, richly browned, and sound hollow when thumped. Turn the loaves out onto wire racks to cool and do not cut before they have reached room temperature. Note: Because these loaves are so light and spongy, use a sharp serrated knife and a gentle seesaw motion when slicing them.
To mix the dough in a food processor: Hand-mix the sponge as directed, then let it rise until doubled in bulk. Scrape the sponge into the work bowl of a food processor fitted with the metal chopping blade. Add the remaining sugar, saffron mixture, the butter, egg, and egg yolks, and mix by snapping the motor on and off 8 to 10 times. Now mix in the remaining flour, 1 cup at a time, by snapping the motor on and off 8 to 10 times. Once all the flour is incorporated, machine-knead the dough by churning 30 to 40 seconds nonstop until the dough rolls into a ball and rides up on the central spindle. Turn the dough into a warm, greased bowl for the first rising, and proceed as the recipe directs.