Place the saffron threads in a small bowl with 2 tablespoons of warm water. Leave to infuse while preparing the other ingredients.
Pour the beef stock into a large, heavy-bottomed casserole or Dutch oven. Add the bay leaves, dried thyme, saffron and its soaking liquid, orange peel and cinnamon stick. Warm gently over low heat while preparing the meat.
Cut the beef into approximately 2 cm (¾-inch) cubes. Season with salt and freshly ground black pepper, then sprinkle with the smoked paprika and flour. Toss until the meat is evenly coated.
Heat approximately 2 tablespoons of olive oil in a large frying pan over medium-high heat. Brown the beef in batches, turning the pieces until they have developed a golden-brown crust on several sides. Avoid overcrowding the pan.
Transfer each batch of browned beef to the casserole containing the warm stock.
After browning the final batch, pour the Pedro Ximénez into the frying pan. Stir to release the browned bits from the bottom and let the sherry bubble for a minute or two, until reduced by approximately half. Pour everything into the casserole.
Add a little more olive oil to the frying pan if needed. Add the chopped onion and garlic and cook over medium heat for approximately 5 minutes, until softened but not browned.
Stir in the tomato paste and a small additional pinch of smoked paprika, if desired. Cook for another minute, stirring continuously.
Add the chopped tomatoes and cook for approximately 5 minutes, until some of their liquid has evaporated and the mixture has thickened slightly.
Transfer the tomato and onion mixture to the casserole with the beef. Stir gently, bring to a very light simmer and cover with a lid. Cook over low heat for 1 hour.
Meanwhile, peel the carrots and cut them into bite-sized pieces. Slice the celery stalk into small pieces.
Heat a little olive oil in the frying pan and sauté the carrots and celery for approximately 3–4 minutes. Add them to the casserole after the beef has cooked for its first hour.
Add the raisins or chopped dried figs. Stir gently, cover and continue simmering for another 1½ hours, or until the beef is becoming tender. Check occasionally and add a little hot water if the sauce reduces too much.
Peel the potatoes and cut them into medium-sized pieces. Add them to the stew for the final 30 minutes of cooking, making sure they are mostly surrounded by the sauce. Continue simmering until the potatoes are tender and the beef is soft enough to break apart easily with a fork.
If you prefer to partially cook the potatoes first, boil them separately in lightly salted water for approximately 15 minutes. Drain and add them to the stew for the final 10–15 minutes, just long enough to finish cooking and absorb some of the sauce.
Once the beef and potatoes are tender, remove the cinnamon stick, orange peel and bay leaves.
Taste the sauce and adjust with salt and freshly ground black pepper. If the sauce is too thin, simmer uncovered for a few more minutes. If it is too thick, add a small splash of hot stock or water.
Serve in deep bowls, garnished with a little fresh thyme. Add some crusty bread on the side to soak up the sauce.