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In a saucepan, melt the butter over medium heat. Add the onion and garlic and cook until soft, but not brown, stirring occasionally, about 5 minutes.
Stir in the flour and cook for another 1-2 minutes, until the flour coats the onions.
Mix in the chile and immediately slowly stream in the chicken stock, stirring as you go.
Bring to a simmer and reduce the sauce for about 15 minutes, until slightly thick. Taste and season with salt and pepper. Use to smother anything and everything or in your favorite recipes with green chile sauce.