Gyroscopic Investing

I have a friend whose parents (in China) are interested in investing in the Permanent Portfolio (US Version.)  However, one of their concerns is the risk of Chinese Yuan appreciation which could wipe out all of the gains in the PP (if priced in Chinese yuan.)

For such an investor, would it make more sense to hold the cash portion of the PP in US Dollars, Chinese Yuan, or both?

I would say definitely Chinese yuan.  If China maintains the dollar peg it will be like owning dollars, and if the peg is abandoned and the yuan rises, then a Chinese investor would want to own yuan.

I concur with MT's advice and will only add that Harry generally recommended holding the PP in your own country's currency unless you live in a nation with an unstable government or a history currency problems.