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In the picture below, the sun is shining from behind the growing cumulus tower. This bright outline along the edge of the cloud is the silver lining, which occurs when light is diffracted by cloud droplets along the cloud's outer edge. Silver linings are observed around thicker clouds containing larger droplets.
Photograph by: Holle
Sometimes, diffraction of sunlight in clouds produce a multitude of colors. This optical effect is called cloud iridescence.
Photograph by: Knupp
These colors are usually observed within 20 degrees of the sun and are easier to look at through sunglasses.
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Rainbows |