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Both simile and metaphor are terms used by literary critics to describe figures of thought (one of the types of figures of speech) used in literary works. Both metaphor and simile are figures of comparison, i.e. explaining on thing by comparing it to something else. The major rationale behind this sort of figure is to explain the abstract in terms of the concrete or strange in terms of the familiar. The difference between simile and metaphor is linguistic, that a simile uses explicit terms of comparison (like, as, etc.) whereas a metaphor does not.
An example of a metaphor would be Shakespeare's:
Dawn in russet mantle clad ...
where the dawn is being compared to a woman wearing a red cloak. A famous simile is Robert Burns'
My love is like a red, red rose ...
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