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1. To peel peaches (apricots may be used unpeeled), fill Dutch oven with water; bring to boiling. Carefully lower peaches, a few at a time, into boiling water; let stand 30 to 60 seconds. With slotted spoon transfer peaches to large bowl of ice water. When cool enough to handle, gently rub skin off peaches. Halve and pit any large peaches; set aside.
2. Drain water from Dutch oven. For pickling mixture, in same Dutch oven combine the 2-12 cups water, vinegar, sugars ,cinnamon, gingerroot, red pepper, 1 teaspoon salt, mustard seeds, and cloves. Bring to boiling, stirring to dissolve sugars. Reduce heat. Simmer, uncovered, 5 minutes.
3. Add peaches, onion, and sweet pepper to pickling mixture; return to boiling. Reduce heat; simmer, covered, 5 minutes or just until tender, gently stirring once or twice. With slotted spoon divide peaches, onion, sweet pepper, and cinnamon evenly among four clean, hot 1-quart jars. (See Safe Storage, below.) Pour pickling mixture into jars; cool. Cover and refrigerate at least 24 hours or up to 3 weeks. Serve peaches with a slotted spoon and drizzle with a little of the juices.