David Belmar, 44, had to be tackled to the ground by police after he jumped over a vehicle barrier at the north entrance of the monarch's official London residence yesterday.
The queen, 87, was not there at the time.
Belmar, from north London, admitted trespass and possession of a bladed weapon when he appeared at Westminster Magistrates Court.
The court heard that he has a long history of mental health issues, is taking medication and is a danger to himself.
"In police custody, he said to police 'I wanted to see the queen. I'm not happy about my benefits,'" prosecutor Edward Aydin told the court.
"He is a danger to the public, carrying a knife in central London, and he is a danger to the queen."
Belmar has a fixation with the queen and received a caution in 1989 for lighting fireworks and throwing them into the grounds of Buckingham Palace, the court heard.
Aydin said that when police searched Belmar after wrestling him to the ground yesterday they found a kitchen knife wrapped in a plastic bag in his jacket pocket.
A number of children were at the gates at the time of the incident, he said.
"Armed guards had to stop him... He could have been fired upon. Other people could have been hurt. And there was a risk of some form of disorder there outside the palace," Aydin said.
The arrest comes after a series of security incidents at Buckingham Palace, the main London residence of the royal family.
In September a man who scaled a fence to get into the palace was arrested on suspicion of burglary.
The most serious breach at the palace came in 1982 when unemployed man Michael Fagan got inside the queen's private chambers while she was in bed.
Fagan, who had climbed over the palace walls and up a drainpipe, spent 10 minutes talking to the sovereign before she was able to raise the alarm.
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